Which of the following is an "Investing" activity?

Question

BlackTom AI · Accepted Answer

Investing activities include the acquisition and disposal of long-term assets and investments (property, plant & equipment, securities, loans made/collected). Selling a delivery truck is a cash inflow from disposing of a long-lived tangible asset, so it is classified as an investing activity.

1. Relevant knowledge points and concepts
- Statement of cash flows categories: Operating activities (day-to-day revenue and expense cash flows), Investing activities (cash flows from buying/selling long-term assets and investments), Financing activities (issuing debt or equity, repaying borrowings, paying dividends).
- Examples: Purchase/sale of equipment, buildings, and investments = investing; issuing stock or borrowing = financing; collecting revenue, paying suppliers, wages, utilities = operating.

2. Step-by-step reasoning
- Identify the transaction: Selling a delivery truck is the disposal of a fixed asset (property, plant & equipment).
- Determine classification rule: Disposal of fixed assets generates cash flows classified under investing activities.
- Apply rule: Therefore, cash received from selling the truck is an investing inflow.

3. Calculations
- No numerical calculation is required for classification. If there were proceeds, e.g., sale for $10,000, that $10,000 would be reported as cash provided by investing activities.

4. Why the correct answer is correct
- The delivery truck is a long-term capital asset. Any cash flows from selling such assets are investing activities by definition on the cash flow statement. Thus "Selling a delivery truck" fits precisely into the investing category.

5. Why the other options are incorrect
- Paying utility bills: Operating activity — routine expense related to operations, cash outflow from operating activities.
- Issuing common stock: Financing activity — obtaining cash from owners, reported in financing activities.
- Earning interest on a bank account: Classification can differ by standard (IFRS allows investing, but under U.S. GAAP interest received is typically reported as operating); in most introductory contexts and GAAP-based teaching this is treated as operating, so it is not the best choice here.

6. Conclusion
Selling a delivery truck is an investing activity. This matches the provided correct answer: "Selling a delivery truck."

Which of the following is an "Investing" activity? 单项选择题

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