[Anonymous]

I’m going through Wiley FAR online test bank right now and am confused with some multiple choice questions and solutions offered. Greatly appreciated if anyone could help answer some of the questions here:

Question 1. Purchased real estate for $550,000 cash which was borrowed from a bank. Is it a financing activity or investing activity in the Statement of Cash Flows?

[Minimorty]

The purchase itself is an investing activity. You are taking the cash that's on your balance sheet and investing it into real estate.

Your statement of cash flows would also show the $550,000 that was borrowed as a financing activity (if you borrowed the money that year). However, it appears the question is only asking you to classify the purchase.

[Author]

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