Investing activities are purchases or sales of assets (land, building, equipment, marketable securities, etc.), loans made to suppliers or received from customers, and payments related to mergers and acquisitions.
Is sale of investment a financing activity?
Investing activities refer to earnings or expenditures on long-term assets, such as equipment and facilities, while financing activities are the cash flows between a company and its owners and creditors from activities such as issuing bonds, retiring bonds, selling stock or buying back stock.
Which of the following is an example of an investing activity?
Purchase of machinery is an example of Cash outflow for investing activity. & Issuance of shares are cash flows relating to financing activities. Prepayment of a contract is a cash flow relating to Operating activity. In the light of above discussion, the correct option is Purchase of machinery.
What is an example of cash flow from investing activities?
Sale of fixed assets (positive cash flow) Purchase of investment instruments, such as stocks and bonds (negative cash flow) Sale of investment instruments, such as stocks and bonds (positive cash flow) Lending of money (negative cash flow)
Which type of marketable securities are the safest?
The return on these types of securities is low, due to the fact that marketable securities are highly liquid and are considered safe investments. Examples of marketable securities include common stock, commercial paper, banker’s acceptances, Treasury bills, and other money market instruments.
Why would a company purchased marketable securities?
A marketable security is a financial asset that can be sold or converted to cash within a year. They are typically securities that can be bought or sold on an exchange. … Investing in marketable securities is much preferred to holding cash in hand because investments provide returns and therefore generate profits.
What are the 3 types of cash flows?
Transactions must be segregated into the three types of activities presented on the statement of cash flows: operating, investing, and financing.
Is sale of equipment an operating activity?
It would appear as investing activity because purchase of equipment impacts noncurrent assets. It would appear as operating activity because sales activity impacts net income as revenue. … It would appear as operating activity because interest payments impact net income as an expense.
Which of the following is the best definition of asset?
Which of the following is the best definition of an asset? An asset is something of value that is owned and can be used productively.
Is paying dividends an investing activity?
Dividends paid are classified as financing activities. Interest and dividends received or paid are classified in a consistent manner as either operating, investing or financing cash activities. Interest paid and interest and dividends received are usually classified in operating cash flows by a financial institution.