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Unformatted text preview: Purchasing equipment decreases cash. Purchasing fixed assets by issuing debt does not affect cash, but it should be shown in a schedule of noncash investing and financing activities that is part of the statement of cash flows. 5-11 When liabilities increase, the firm has either raised cash and promised to pay it back later or it has preserved cash rather than paying it out to reduce growing accounts payable. So more liabilities lead to more cash. Likewise, increases in noncash assets require cash. Either cash is spent to get the asset or an asset is recorded instead of receiving cash....
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This note was uploaded on 04/11/2008 for the course ACCT 151 taught by Professor Largay during the Spring '07 term at Lehigh University .
- Spring '07
- Financial Accounting