Which of the following describes the investing activities as shown in the statement of cash flows? Select one: O a. Shows the beginning and ending balance of cash O b. Includes increases and decreases in long-term assets O c. Includes transactions affecting the capitalization of the business O d. Includes transactions that primarily impact current assets and current liabilities
The transaction analysis is done with the help of the accounting equation. The basic accounting equation is alternatively known as the balance sheet equation is based on the double-entry system which says that for each transaction happening in a business…
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Which of the following describes the investing activities as shown in the statement of cash flows ?
Select one:
O a. Shows the beginning and ending balance of cash
O b. Includes increases and decreases in long-term assets
O c. Includes transactions affecting the capitalization of the business
O d. Includes transactions that primarily impact current assets and current liabilities
Definition Definition Net amount of cash that an entity receives and expends over the course of a given period. For a business to continue operating, positive cash flows are required, and they are also necessary to produce value for investors. Investors in particular prefer to see growing cash flows even after capital expenditures have been paid for (which is known as free cash flow).
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What are some examples of investing activities?
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Definition of Investing Activities
Investing activities often refers to the cash flows from investing activities, which is one of the three main sections of the statement of cash flows (or SCF or cash flow statement). In this section of the SCF the company lists its cash inflows and cash outflows resulting from the disposal or acquisition of the company’s long-term assets that took place during the time indicated in the heading of the statement.
Examples of Investing Activities
When a company makes long-term investments in securities, acquires property, equipment, vehicles, or it expands its facilities, etc., it is assumed to be using or reducing the company’s cash and cash equivalents. As a result, these investments and capital expenditures are reported as negative amounts in the cash flows from investing activities section of the SCF.
When a company sells any of its long-term investments or sells any of its property, plant and equipment, it is assumed to be providing or increasing the company’s cash and cash equivalents. Therefore, the cash received from the sale of these long-term assets will be reported as positive amounts in the cash flows from investing activities section of the SCF.
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