If a company has both a receipt and payment of cash related to the acquisition of equipment for $15,000 cash and the sale of machinery for $10,000 cash, the
A)two cash effects can be netted and presented as one item in investing activities.
B)cash receipt from the sale and cash payment for the acquisition should be reported separately in investing activities.
C)two cash effects can be netted and presented as one item in financing activities.
D)cash receipt and cash payment should be reported separately in financing activities.

Question

Quizplus · Accepted Answer

Cash flows from the purchase and sale of equipment or machinery are considered investing activities and must be reported separately in the statement of cash flows to provide clear information about the company's investing transactions.

If a Company Has Both a Receipt and Payment of Cash