Which of the following statements is true?
A)Purchase of equipment is a cash outflow for investing activities.
B)Amortization expense is added to cash from financing activities.
C)Cash received from accounts receivable is a cash inflow from financing.
D)Purchase of treasury stock is a cash outflow for operating activities.

Question

Quizplus · Accepted Answer

Purchase of equipment is a capital expenditure that involves the acquisition of long-term assets for the business. As a result, it is a cash outflow for investing activities in the statement of cash flows.

B, C, and D are incorrect statements. Amortization expense is a non-cash expense and is added back to net income to calculate cash from operating activities. Cash received from accounts receivable is a cash inflow from operating activities, and the purchase of treasury stock is a cash outflow from financing activities.

Which of the Following Statements Is True