Which action is a use of cash in an investing activity?

Unlock all questions

This demo includes only 20 questions. Upgrade to access hundreds of questions, flashcards, exam simulations, and disable ads.

Full question bankExam simulationsFlashcards
From $24.99Unlock all

Prepare for the WGU ACCT2350 Intro to Business Accounting Exam. Practice with multiple choice questions and detailed solutions to sharpen your accounting skills. Master your exam with confidence!

Multiple Choice

Which action is a use of cash in an investing activity?

Explanation:
In a statement of cash flows, activities are categorized as operating, investing, or financing. An investing activity involves cash used for buying or selling long-term assets. Buying a machine is spending cash to acquire a plant asset that will be used in the business for many years, so it counts as an investing cash outflow. The other options fit different categories: paying salaries is an operating cash outflow tied to day-to-day operations; paying dividends is a financing activity related to returning capital to shareholders; collecting accounts receivable is an operating cash inflow from customers.

In a statement of cash flows, activities are categorized as operating, investing, or financing. An investing activity involves cash used for buying or selling long-term assets. Buying a machine is spending cash to acquire a plant asset that will be used in the business for many years, so it counts as an investing cash outflow.

The other options fit different categories: paying salaries is an operating cash outflow tied to day-to-day operations; paying dividends is a financing activity related to returning capital to shareholders; collecting accounts receivable is an operating cash inflow from customers.

More Multiple Choice Questions
Subscribe

Get the latest from Examzify

You can unsubscribe at any time. Read our privacy policy