Question

Indicate the section (O, I, or F) where each of the following transactions 1 through 8 would appear on the statement of cash flows.

O. Cash flows from operating activity

I. Cash flows from investing activity

F. Cash flows from financing activity

1. Cash purchase of equipment

Short answer

The cash flow statement reports the movement of cash and transaction will come under investing activities.

Step-by-step solution

Definition of cash flow statement

The cash flow statement is defined as the financial statement which shows receipts and payments using cash throughout the business during the year.

Indication of sections

The transaction mentioned will come under Investing activities. This is because cash flow from investing activities records all the transactions which are related to the cash payment for acquiring the fixed asset. In this situation, the company is purchasing equipment that is considered a fixed asset.