If Cash Is Paid to Purchase a Factory Building,in Which

question 35

Multiple Choice

If cash is paid to purchase a factory building,in which section of the statement of cash flows would this appear?

• A)Operating activities section.
• B)Investing activities section.
• C)Financing activities section.
• D)Capital activities section.
• E)None of the answer choices is correct.

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Definitions:

Trade Credit

A type of commercial financing in which a buyer is allowed to purchase goods or services and pay the supplier at a later scheduled date.

Commercial Paper

An unsecured, short-term debt instrument issued by corporations to finance their immediate cash flow needs.

Spontaneous Financing

Refers to funding that occurs naturally as a firm's operations grow, such as trade credit that increases with sales.

Accrual Liabilities

Obligations that a company has incurred, for which invoices have not yet been received or payment has not been made.