Increases and decreases in the long-term liability accounts are reported on the statement of cash flows as:
A)operating activities.
B)investing activities.
C)financing activities.
D)noncash activities.

Question

Quizplus · Accepted Answer

Increases and decreases in long-term liability accounts represent financing activities because these transactions generally involve borrowing or lending money in the long term from external sources, which is a financing activity. The statement of cash flows is divided into three sections: operating activities, investing activities, and financing activities. Therefore, changes in long-term liability accounts would be reported under the financing activities section of the statement of cash flows.

Increases and Decreases in the Long-Term Liability Accounts Are Reported