The board of directors is considering approving a plant expansion which will require a sizable advance payment to take place early this year.How will this decision affect the period's cash flows from investing-direct method?

Question

Quizplus · Accepted Answer

A plant expansion that requires a sizable advance payment is considered a capital expenditure, which is classified under cash flows from investing activities. Making such a payment will result in cash outflow, thereby decreasing this period's cash flows from investing.

The Board of Directors Is Considering Approving a Plant Expansion