When Using the Indirect Method, How Is the Purchase of Equipment

question 168

Multiple Choice

When using the indirect method, how is the purchase of equipment for cash shown on the statement of cash flows?

• A) Operating activity
• B) Investing activity
• C) Financing activity
• D) Noncash investing and financing activity

---

Definitions:

Asset Account

An asset account is a category in the financial statements that reports the value of a company's assets, such as cash, inventory, property, and equipment.

Liability Account

A type of accounting ledger entry that represents a company's legal debts or financial obligations that arise during business operations.

Invoice Value

The total amount shown on an invoice that a customer must pay, including the cost of goods or services, taxes, and any additional fees.

Merchandise Returned

Goods that are sent back by the customer to the seller, usually due to defects or dissatisfaction.