- CFA Exams
- CFA Level I Exam
- Topic 4. Financial Statement Analysis
- Learning Module 4. Analyzing Statements of Cash Flows I
- Subject 2. Classification of Cash Flows and Non-Cash Activities
CFA Practice Question
Ivex Corporation purchased a building by paying 10% of the purchase price in cash and issuing a mortgage payable to the seller for the balance. Since this transaction involves simultaneous non-cash investing (building) and financing (mortgage payable) activity, it would not appear in the body of the statement of cash flows. True or False?
Correct Answer: False
This transaction would be included in the statement of cash flows.
User Contributed Comments 8
| User | Comment |
|---|---|
| examinee | It will appear in the footnotes but not in the statement. No? |
| synner | is it because 10% of the purchase price was paid in cash? |
| katybo | that's right |
| 3dmouse | If the company just issuea martgage payable for the whole tranaction, it still would not appear in the body of the statment of cash flows? I am guessing, the answer is false. ( correct me if i am wrong) because the body of the statement of CF includes footnote that describle any noncash investment. |
| cong | Even if a transaction is recorded in the footnote or supplementary schedule, you can still say the transaction appears on the cash flow statement . |
| rocyang | key word: "in cash" |
| Kevdharr | They paid cash so it's on the statement of cash flows. The remaining balance was bought on credit (accounts payable increased). |
| dbedford | So the portion that was paid in cash will show up on the cash flow statement the rest will show up else where |