Question

Which of the following is a noncash investing and financing activity? A. issuance of common stock to acquire land B. payment of a cash dividend C. purchase of inventory on account D. payment of a six-month note payable

Answer 1

Issuance of common stock to acquire land.

Answer: Option A

Explanation:

Non cash investing and financing activity is the activity which does not involve the cash in the payment and they do not directly affect cash. If a person wants to buy land but does not want to use cash for the transaction, then stocks can be issued for the same.

This transaction would be a non cash transaction because the stock is used instead of cash. Other example can be issuance of common stock to retire any long term debt.