Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

13. Statement of Cash Flows

Introduction to the Statement of Cash Flows

Financial Accounting

13. Statement of Cash Flows

Introduction to the Statement of Cash Flows

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Multiple Choice

How is the cash paid to purchase land reported in the statement of cash flows?

As an outflow in the operating activities section

As an outflow in the financing activities section

As an outflow in the investing activities section

As a non-cash transaction disclosed in the notes

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Verified step by step guidance

Understand the purpose of the statement of cash flows: It categorizes cash transactions into operating, investing, and financing activities to show how cash is generated and used during a period.

Identify the nature of the transaction: Purchasing land involves acquiring a long-term asset, which is classified as an investing activity because it pertains to the acquisition or disposal of investments and fixed assets.

Determine the cash flow direction: Since cash is paid to purchase the land, it represents a cash outflow, reducing the company's cash balance.

Locate the appropriate section in the statement of cash flows: Cash outflows related to the purchase of long-term assets, such as land, are reported in the investing activities section.

Note any additional disclosures: If the transaction involves non-cash elements (e.g., exchanging assets or issuing stock), these are disclosed in the notes to the financial statements rather than directly in the cash flow statement.