Question

22) Where would the event purchased land for cash appear, if at all, on the indirect statement of cash flows?

a. Operating activities section
b. Investing activities section
c. Financing activities section
d. Does not represent a cash flow

Answer 1

In the cash flow statement whether the direct or indirect method is used, it depends on the nature of business. If the company is into buying and selling (trading) of land, the cash purchase of land can form part of the Operating Activities. If it is otherwise, the cash purchase of land should be included in the Investing Activities section.