Finance lease payments pertaining to the reduction of the outstanding finance lease liability are classified in the statement of cash flows as: Operating activities Investing activities Financing activities Not presented

Finance lease payments pertaining to the reduction of the outstanding finance lease liability are classified in the statement of cash flows as: Operating activities Investing activities Financing activities Not presented

College Accounting, Chapters 1-27

23rd Edition

ISBN:9781337794756

Author:HEINTZ, James A.

Publisher:HEINTZ, James A.

Chapter23A: Statement Of Cash Flows: The Direct Method

Section: Chapter Questions

Problem 4RQ: Under the direct method of preparing a statement of cash flows, what adjustment is made for...

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Concept explainers

Leasing

Leasing is a contractual arrangement in which someone (a lessee) pays the owner (or lessor) of a building, land, vehicle, or other asset for the use of that asset. The lease is the agreement between lessee and lessor.

Question

100%

70. Finance lease payments pertaining to the reduction of the outstanding finance lease liability are classified in the statement of cash flows as:

1. Operating activities
2. Investing activities
3. Financing activities
4. Not presented

Definition Definition Net amount of cash that an entity receives and expends over the course of a given period. For a business to continue operating, positive cash flows are required, and they are also necessary to produce value for investors. Investors in particular prefer to see growing cash flows even after capital expenditures have been paid for (which is known as free cash flow).

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