The purchase of a long-term asset using a long-term note payable is an example of a noncash investing and financing activity,which should be disclosed in a note or separate schedule.

Question

Quizplus · Accepted Answer

This statement is true. A long-term note payable is a financing activity and the purchase of a long-term asset is an investing activity. Both activities do not involve cash transactions, hence they are considered noncash activities and should be disclosed in a note or separate schedule in the financial statements.

The Purchase of a Long-Term Asset Using a Long-Term Note