Question

The purchase of equipment for the manufacturing of inventory belongs in the operating activities section of the statement of cash flows. True or False True False

Answer 1

False

Step-by-step explanation:

When a company purchases equipment it is not carrying out an operating activity, it is investing. So the purchase of equipment must be reported under cash flows form investing activities. When a company invests in purchasing new equipment it will increase its assets.

Cash flow statements are divided into: operating, investing, and financing activities.