If a firm's cash-flow statement shows that cash was used for investments,which of the following would seem most likely?

Question

Quizplus · Accepted Answer

When a firm's cash-flow statement shows that cash was used for investments, it usually means that the company has made some capital expenditures, such as buying new equipment, acquiring long-term assets or purchasing other businesses. Therefore, choice C, new machines were acquired, seems most likely. Choices A, B, and D, involving an increase in inventory, repurchasing common stock or paying cash dividends, respectively, are not usually considered investments and would not show up as cash outflows in the investment section of the cash-flow statement.

If a Firm's Cash-Flow Statement Shows That Cash Was Used