Question

In a statement of cash flows, which of the following would be classified as an investing activity?

A. Interest paid to a lender.
B. The issuance of bonds payable.
C. The sale of equipment.
D. The sale of the company's own common stock for cash.

Answer 1

Answer:

C. The sale of equipment.

Explanation:

Investing activities: It records those activities that include the long-term asset buying and selling. The buying is a cash outflow while the sale is a cash inflow.

The cash outflow decreases the cash balance whereas cash inflow increases the cash balance. So the buying would be shown in a negative sign while the selling is shown in the positive sign

Hence, the correct option is C.