Final answer:
The purchase of property, plant, and equipment is recorded as a cash outflow in the investing activities section of the Statement of Cash Flows, a financial statement that shows how a company's cash levels change over time.
Step-by-step explanation:
When buying property, plant, and equipment, this is recognized as capital expenditure and is reported under the cash flows from investing activities section of the Statement of Cash Flows (SOCF). The SOCF is a financial statement that details how changes in balance sheet accounts and income affect cash and cash equivalents, showing how the company raises the money it needs and spends its cash.
The purchase of long-term assets such as property, plant, and equipment represents an outflow of cash, as it is money spent by a company for acquiring or maintaining fixed assets. If the company sells any of these assets, it would be considered an inflow as the company is receiving cash. This section of the SOCF is vital for investors and creditors to understand the amount of investment a company is making in its long-term assets, which is key to assessing the company's long-term solvency and investment strategy.