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11 October, 00:00

The purchase of equipment for the manufacturing of inventory belongs in the operating activities section of the statement of cash flows. True or False True False

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  1. 11 October, 00:19
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    False

    Explanation:

    When a company purchases equipment it is not carrying out an operating activity, it is investing. So the purchase of equipment must be reported under cash flows form investing activities. When a company invests in purchasing new equipment it will increase its assets.

    Cash flow statements are divided into: operating, investing, and financing activities.
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