The amount of cash a company spends to buy a new factory is best described as which type of cash flow?
A) Operating
B) Investing
C) Financing
D) Not a cash flow

Question

Quizplus · Accepted Answer

The cash spent on buying a new factory is considered an investing cash flow because it involves the purchase of a long-term asset that is expected to generate a return over a period of time. Operating cash flows are related to the day-to-day activities of the business, such as cash received from customers and cash spent on expenses. Financing cash flows are related to raising or repaying capital, such as issuing or repurchasing stocks, paying dividends, or borrowing or repaying loans. Buying a new factory is not considered as "not a cash flow" because it does involve a significant outflow of cash from the company.

The Amount of Cash a Company Spends to Buy a New