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Land that cost $100,000 was sold at a $1,000 loss during the year. How much cash was received from the sale, and where is it reported?
A$100,000 inflow in financing activities
B$101,000 inflow in investing activities
C$99,000 inflow in investing activities
D$99,000 outflow in operating activities
Answer & Solution
Correct answer: C. $99,000 inflow in investing activities
1. Cash received = cost − loss = $100,000 − $1,000 = $99,000.
2. Selling land is an investing activity, so it is reported there as an inflow.
3. Trap: $101,000 (option B) adds the loss instead of subtracting it; a loss reduces proceeds.
4. It is not financing (not debt/equity) nor operating.
_Source: Jonick, Principles of Financial Accounting (CC BY-SA 4.0), §7.2.3 "Investing Activities Section", p.274_
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