Question

Which of the following would be considered a 'cash-flow item from an "investing" activity'?

A Cash outflow to the government for taxes. Correct Answer Incorrect Answer
B Cash outflow to purchase bonds issued by another company. Correct Answer Incorrect Answer
C Cash outflow to shareholders as dividends. Correct Answer Incorrect Answer
D Cash outflow to payment of interest on bonds Correct Answer Incorrect Answer
E None of the above Correct Answer Incorrect Answer

Solution

Cash outflows related to the purchase of bonds issued by another company are considered as cash-flow items from an "investing" activity on the cash flow statement. Investing activities involve the acquisition or disposal of long-term assets and other investments, such as stocks, bonds, and real estate.

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