Which item is normally classified as an investing cash flow in the statement of cash flows?
Correct answer: D. Cash paid to purchase machinery
- A. Cash received from issuing shares
- B. Cash received from customers
- C. Cash paid to employees
- D. Cash paid to purchase machinery
Explanation
The purchase of machinery involves acquiring a long-term non-current asset and is therefore an investing cash flow. Customer receipts and employee payments are operating flows, while issuing shares is a financing flow.
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About Financial Statements
Financial statements present a business's financial performance and position through the income statement, statement of financial position, cash flow statement and changes in equity. Questions involve preparing and interpreting these statements, adjusting entries, depreciation, closing inventory, accrued and prepaid items, and distinguishing profit from cash flow.
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