Question

A donor provides a large cash contribution that is to be used for acquisition of a new building. Under FASB standards, how would this contribution be reported by a not-for-profit organization on its statement of cash flows?

A. Operating activity.
B. Investing activity.
C. Financing activity.
D. Capital and related financing activity.

Answer 1

Answer:

B. Investing activity.

Explanation:

Investing activity refers to payment for acquisition of assets like a new building. It is an investing activity because the asset is expected to generate returns in terms of savings in rent.