Final answer:
Purchasing equipment by signing a 3-year, 10% note payable is a noncash investing and financing activity. Investing activities relate to long-term assets and financing activities involve raising capital, such as through borrowing.
Step-by-step explanation:
When a firm purchases equipment by signing a 3-year, 10% note payable, this is an example of a noncash investing and financing activity. Noncash activities involve transactions that do not result in a direct exchange of cash. Such activities are disclosed in the financial statements in a separate schedule, typically referred to as the statement of noncash investing and financing activities.
Investing activities usually involve the acquisition or disposal of long-term assets, such as equipment, that are expected to provide economic benefits in the future. The signing of a note payable to purchase equipment is a financing activity because it represents a means of raising capital through borrowing. In this case, there is no immediate cash flow, but the transaction still impacts the company's financial position and must be reported.