The Purchase of Long-Term Assets by Issuing a Note Payable

question 89

Multiple Choice

The purchase of long-term assets by issuing a note payable is reported on the statement of cash flows in the:

• A) Operating section.
• B) Financing section.
• C) Investing section.
• D) Notes to the statement of cash flows.
• E) Both financing and investing sections.

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Definitions:

Long-Term Liabilities

Financial obligations of a company that are due beyond one year from the balance sheet date.

Accounts Payable Turnover Ratio

A liquidity ratio that measures how many times a company pays off its suppliers over a period.

Accounts Payable

Money owed by a business to its suppliers or creditors for goods or services received.

Inventory

The raw materials, work-in-process products, and finished goods that are considered to be the portion of a business's assets that are ready or will be ready for sale.