Arturo Sales Purchased Some Equipment for $12,000 by Issuing a 6-Month

question 138

Multiple Choice

Arturo Sales purchased some equipment for $12,000 by issuing a 6-month note payable. How would this transaction be shown on the statement of cash flows?

• A) In the noncash financing and investing activities section
• B) In the investing activities section
• C) In the operating activities section
• D) In the financing activities section

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Definitions:

Fair Value Allocation

Fair Value Allocation involves the process of assigning the fair value to the assets and liabilities of a company, especially during an acquisition, for financial reporting purposes.

Amortization

The process of spreading the cost of an intangible asset over its useful life, thereby reducing a company's taxable income.

Equipment

Tangible assets or physical items used in the operation of a business, including machinery, computers, and office furniture.

Common Stock

A type of equity ownership in a corporation, entitling holders to vote on corporate matters and receive dividends.