A corporation recorded the following entry: $$\begin{array} { | l | l | l | }
\hline \text { nvestment in common shares to be held indefinitely } & 2,000 & \
\hline \text { Cash } & & 2,000 \
\hline
\end{array}$$ How would this transaction be shown on a Statement of Cash Flows?
A) Cash outflow for operating activities
B) Cash outflow for investing activities
C) Cash outflow for financing activities
D) Cash inflow for financing activities

Question

A corporation recorded the following entry: $$\begin{array} { | l | l | l | } 
\hline \text { nvestment in common shares to be held indefinitely } & 2,000 & \
\hline \text { Cash } & & 2,000 \
\hline
\end{array}$$ How would this transaction be shown on a Statement of Cash Flows?
A) Cash outflow for operating activities
B) Cash outflow for investing activities
C) Cash outflow for financing activities
D) Cash inflow for financing activities

Quizplus · Accepted Answer

Purchasing investments, such as common shares to be held indefinitely, is considered an investing activity, thus it results in a cash outflow in the investing activities section of the Statement of Cash Flows.

A Corporation Recorded the Following Entry How Would This Transaction Be Shown on a Statement of |