Which of the following would appear in the cash flows from investing activities section of the statement of cash flows? a. Purchase of land for cash b. Purchase of inventory c. Payment of bond interest d. Discard of fully depreciated equipment with no salvage value

Question

Business

Marlene Ray

2 August, 00:32

Which of the following would appear in the cash flows from investing activities section of the statement of cash flows? a. Purchase of land for cash b. Purchase of inventory c. Payment of bond interest d. Discard of fully depreciated equipment with no salvage value

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Answers (1)

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Brooklyn Stein · Answer 1

a. Purchase of land for cash

Explanation:

Any exchange of assets that results in inflow or outflow of cash, which is from any kind of investment made by the company would result in investing activity.

Purchase of land is capital in nature and is an investment this is a negative amount in investing activities as this is an outflow.

Purchase of inventory is operating activity, though it might be in exchange of cash.

Payment of interest on bonds is a financing activity as bonds issued creates funds for the company.

Discarding an asset though capital in nature for zero value as there is no money exchanged will not involve any cash flow.