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

Question

Quizplus · Accepted Answer

The exchange of common shares for the purchase of machinery is a noncash transaction and is not reported in the operating or investing activities sections of the statement of cash flows. Instead, it is shown in the separate schedule of noncash investing and financing activities which accompanies the statement of cash flows. Therefore, option B is the correct choice.

On an Indirect Method Statement of Cash Flows,the Purchase of Machinery