Which of the following is an example of a non-cash activity?

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Master the UCF ACG2021 Principles of Financial Accounting Final Exam. Study with comprehensive practice tests, flashcards, and multiple choice questions, each with detailed explanations. Ace your exam!

The correct choice demonstrates a non-cash activity because it involves acquiring an asset, in this case, land, through the assumption of a liability rather than through an immediate cash transaction. When a company purchases land by issuing debt, it recognizes the land as an asset and simultaneously recognizes a liability for the debt. This transaction does not impact cash at the time of the purchase; thus, it qualifies as a non-cash activity. In financial accounting, such transactions are important to note since they can significantly affect a company's financial position without directly involving cash flows.

The other examples involve direct cash transactions. Issuing stock for cash involves an inflow of cash for the company, purchasing advertising with cash is a straightforward expenditure of cash, and borrowing funds through a bank loan results in cash inflow. None of these reflect non-cash activities since they directly impact the company’s cash position.