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Which cash flows are grouped under investment activities?
AThose from the purchase and sale of fixed assets
BThose from the production of goods and services
CThose from debt and equity financing decisions
DThose from the payment of income taxes owed
Answer & Solution
Correct answer: A. Those from the purchase and sale of fixed assets
1. Investment activities cover cash flows related to the purchase and sale of fixed assets.
2. Buying more fixed assets therefore shows as cash used in investment activities.
3. Production of goods and services falls under operating activities.
4. Debt and equity financing falls under financing activities, which is where repayments of notes payable and long-term debt appear.
_Source: OpenStax Introduction to Business (CC BY 4.0), Ch 14 "Using Financial Information and Accounting", section 14.6 The Statement of Cash Flows_
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