On an indirect method statement of cash flows, the purchase of machinery in exchange for common shares is:
A) reflected in the operating activities section
B) shown in the schedule of noncash investing and financing activities which accompanies the statement of cash flows
C) ignored
D) reflected in the investing activities section

Question

Quizplus · Accepted Answer

The purchase of machinery in exchange for common shares is a non-cash transaction, so it would not be reflected in the operating activities section. However, it is still an investing and financing activity, so it would be shown in the schedule of noncash investing and financing activities which accompanies the statement of cash flows. Therefore, option B is the correct answer.

On an Indirect Method Statement of Cash Flows, the Purchase