Two years ago,your company bought $40,000 in bonds from another company.This month,it sold half of those bonds for $20,640 and purchased the common stock of another company for $1,000.On the statement of cash flows for this accounting period,your company would report a net cash:
A) outflow of $19,640 from investing activities.
B) inflow of $19,640 from investing activities.
C) inflow of $20,640 from investing activities.
D) outflow of $20,640 from investing activities.

Question

Quizplus · Accepted Answer

The company received $20,640 from the sale of half of the bonds, which represents an inflow of cash from investing activities. The purchase of the common stock for $1,000 represents an outflow of cash from investing activities. Therefore, the net cash flow from investing activities is an inflow of $19,640 (20,640 - 1,000).

Two Years Ago,your Company Bought $40,000 in Bonds from Another