Allen Company bought a new copy machine to be depreciated straight line for three years for use by sales personnel. Where would this purchase be reflected on the Statement of Cash Flows?
A) It would be an expense on the income statement so it would be reflected in operating cash flows.
B) It would be an addition to property, plant and equipment so it would be an investing activity.
C) It would be an addition to cash so it would be reflected in the change in cash.
D) None of the above answers is correct.

Question

Quizplus · Accepted Answer

This purchase is an investment in a long-term asset (copy machine) and therefore is classified as an investing activity on the Statement of Cash Flows.

Allen Company Bought a New Copy Machine to Be Depreciated