The statement of cash flows reports noncash investing and financing transactions in:

• A. A separate schedule or in the notes to the financial statements
• B. The investing activities section
• C. The financing activities section
• D. The operating activities section

Answer: (A)

Verified step by step guidance

1. Understand the purpose of the statement of cash flows: It is used to report cash inflows and outflows from operating, investing, and financing activities, as well as noncash transactions that impact financial position.
2. Recognize that noncash investing and financing transactions do not involve direct cash flows but still affect the financial position of the company. Examples include acquiring assets through issuing debt or equity.
3. Learn where noncash transactions are reported: They are disclosed in a separate schedule or in the notes to the financial statements, rather than being included in the main sections of the statement of cash flows.
4. Understand why noncash transactions are not included in the operating, investing, or financing sections: These sections are reserved for transactions that directly involve cash inflows or outflows.
5. Review the importance of disclosure: Reporting noncash transactions in a separate schedule or notes ensures transparency and provides a complete picture of the company's financial activities.