Each of the following are classified as a noncash investing or financing activity except:

• A. Paying cash dividends to shareholders
• B. Exchanging equipment for a note payable
• C. Issuing common stock to purchase land
• D. Converting bonds payable into common stock

Answer: (A)

Verified step by step guidance

1. Step 1: Understand the concept of noncash investing and financing activities. These are transactions that do not involve cash but still represent significant investing or financing activities. Examples include exchanging equipment for a note payable or converting bonds payable into common stock.
2. Step 2: Review the options provided in the problem. Identify which activities involve cash and which do not. Paying cash dividends to shareholders involves the use of cash, while the other options involve noncash transactions.
3. Step 3: Analyze why paying cash dividends to shareholders does not qualify as a noncash investing or financing activity. Cash dividends are a financing activity but involve the outflow of cash, making them distinct from noncash activities.
4. Step 4: Confirm that the other options (exchanging equipment for a note payable, issuing common stock to purchase land, and converting bonds payable into common stock) are examples of noncash investing or financing activities because they do not involve cash transactions.
5. Step 5: Conclude that the correct answer is 'Paying cash dividends to shareholders,' as it is the only activity listed that involves cash and does not qualify as a noncash investing or financing activity.