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Learning Objective $16-$C$1$: Distinguish between operating, investing, and financing activities, and describe how noncash investing and financing activities are disclosed.

The purpose of the statement of cash flows is to report major cash receipts and cash payments related to operating, investing, or financing activities. Operating activities include transactions and events that determine net income. Investing activities include transactions and events that mainly affect long$-$term assets. Financing activities include transactions and events that mainly affect long$-$term liabilities and equity. Noncash investing and financing activities must be disclosed in either a note or a separate schedule to the statement of cash flows. Examples are the retirement of debt by issuing equity and the exchange of a note payable for plant assets.

Measurement of Cash Flows

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