What section of the cash flow statement would include the purchase of land and equipment?

• A. Operating Activities
• B. Investment Activities
• C. Financing Activities
• D. Non-operating Activities

Answer: (B)

The purchase of land and equipment is categorized under Investment Activities on the cash flow statement. This section reflects the cash flows associated with the acquisition and disposal of long-term assets, which are essential for a company's operations and contribute to its future revenue-generating capabilities.

Investment activities typically include transactions involving property, plant, and equipment, as well as investments in securities. Since purchasing land and equipment involves a significant outflow of cash for the purpose of acquiring assets that will support the company's operations over the long term, it logically falls into this category.

In contrast, Operating Activities would include cash flows from the core business operations, Financing Activities concern cash flows related to borrowing or equity issuance, and Non-operating Activities would typically encompass transactions outside the primary business operations. Hence, the inclusion of land and equipment purchases specifically within Investment Activities accurately reflects their role in the company's capital expenditure and long-term asset management.