Oregon Company is preparing its statement of cash flows using the indirect method.During the year,the company purchased equipment for $15,000 cash.Which of the following statements is TRUE?
A) $15,000 would be shown as a negative cash flow in the operating activities section.
B) $15,000 would be shown as a negative cash flow in the investing activities section.
C) $15,000 would be shown as a positive cash flow in the investing activities section.
D) $15,000 would be shown as a positive cash flow in the financing activities section.

Question

Quizplus · Accepted Answer

The purchase of equipment for $15,000 is a cash outflow for investing activities, as it is classified as a capital expenditure. Therefore, it should be shown as a negative cash flow in the investing activities section.

Oregon Company Is Preparing Its Statement of Cash Flows Using