Cash flows from acquiring and disposing of long-term assets are classified as
A)operating activities.
B)investing activities.
C)financing activities.
D)purchasing activities.

Question

Quizplus · Accepted Answer

Cash flows related to acquiring and disposing of long-term assets (such as property, plant and equipment) are classified as investing activities in the statement of cash flows. This is because these cash flows represent investments in the company's productive capacity and are likely to have a future economic benefit. Operating activities relate to the primary business activities of the company, while financing activities relate to the company's sources of financing and the payment of dividends. Purchasing activities is not a standard category in the statement of cash flows.

Cash Flows from Acquiring and Disposing of Long-Term Assets Are