The purchase of equipment financed by long-term notes payable is an example of ________.

Question

BlackTom AI · Accepted Answer

The question asks to identify the correct descriptor for the transaction: buying equipment with financing obtained through long-term notes payable. Since cash is not exchanged at the date of the purchase (the equipment is acquired and a long-term note payable is created to finance it), this is considered a non-cash investing and financing activity.

In more detail, investing activities include the acquisition of long-term assets such as property, plant, and equipment. Financing activities involve obtaining resources from creditors or owners, including notes payable. When these two types of actions occur together in a single transaction—purchasing a capital asset while issuing a long-term note payable—the combined event is classified as a non-cash investing and financing activity for cash flow reporting purposes.

A critical nuance is that, because no cash changes hands at the time of the transaction, it does not appear in the cash flow from operating activities. Instead, the effect is disclosed in a supplementary schedule of non-cash investing and financing activities, clarifying how the asset was financed.

If there were cash paid at purchase, the entry would be a standard investing outflow and would not be categorized as non-cash. Conversely, if cash were received or a different financing instrument were used, the classification could vary. In short, the key idea is that the transaction involves investing in equipment and financing via a long-term note, with no immediate cash movement at the time of the agreement, which defines it as a non-cash investing and financing activity.

The purchase of equipment financed by long-term notes payable is an example of ________.

查看解析

登录即可查看完整答案

类似问题

Which of the following statements about shares issued in exchange for assets is true?

In a consumer society, many adults channel creativity into buying things

Economic stress and unpredictable times have resulted in a booming industry for self-help products

People born without creativity never can develop it

A product has a selling price of $20, a contribution margin ratio of 40% and fixed cost of $120,000. To make a profit of $30,000. The number of units that must be sold is: Type the number without $ and a comma. Eg: 20000

Which of the following statement regarding cost is correct:

Under the assumptions used in cost-volume-profit analysis, as the activity increases:

The CVP and break-even analysis are supported by a range of important assumptions. Which of the following is not an assumption of the CVP:

更多留学生实用工具

考试浏览器助手

风格化写作助手

论文查重助手

文献引用助手

课堂转译助手

课堂笔记助手

Quiz搜索助手

学校历年真题

智能刷题助手

智能匹配练习

希望你的学习变得更简单