On the Statement of Cash Flows, How Would a Company

question 94

Multiple Choice

On the statement of cash flows, how would a company report the purchase of machinery?

• A) As cash used in operating activities.
• B) As cash used in purchasing activities.
• C) As cash used in investing activities.
• D) As cash used in financing activities.

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Definitions:

Income Statement

A financial statement detailing a company's revenues, expenses, and profits over a specific period, often quarterly or annually.

Operating Expense

This refers to the costs associated with running a business's day-to-day operations, excluding costs linked to production.

Tax Effect

The impact of a company's tax obligations on its financial statements, including how taxes affect the overall expenses and net income.

Horizontal Analysis

An accounting method used to compare financial data across multiple periods, showing changes in dollar amounts and percentages to identify trends.