Which of the following items would be classified as an investing activity in a statement of cash flows?Group of answer choicesPayments for businesses.Proceeds from the repayment of related party loans.Proceeds from the sale of plant and equipment.All of the items would be classified as investing activities.
Question
Which of the following items would be classified as an investing activity in a statement of cash flows?Group of answer choicesPayments for businesses.Proceeds from the repayment of related party loans.Proceeds from the sale of plant and equipment.All of the items would be classified as investing activities.
Solution
Investing activities in a statement of cash flows typically involve the purchase and sale of long-term assets, such as property, plant, and equipment, as well as investment securities.
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Payments for businesses: This is an investing activity as it involves the outflow of resources to acquire a business.
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Proceeds from the repayment of related party loans: This is not typically classified as an investing activity. It would usually be considered a financing activity as it involves the inflow of resources from the repayment of a loan.
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Proceeds from the sale of plant and equipment: This is an investing activity as it involves the inflow of resources from the sale of a long-term asset.
So, the correct answer is "Proceeds from the sale of plant and equipment" and "Payments for businesses" would be classified as investing activities in a statement of cash flows. The option "Proceeds from the repayment of related party loans" would not typically be classified as an investing activity.
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