Old equipment having a book value of $12,000 was sold for $20,000 cash.New equipment was purchased for $25,000 cash.Additional equipment was acquired in exchange for a $17,000 long-term note payable.The net cash flow from investing activities was ________.
A) $5,000 cash outflow
B) $22,000 cash outflow
C) $25,000 cash outflow
D) $42,000 cash outflow

Question

Quizplus · Accepted Answer

The net cash flow from investing activities is calculated by considering the cash inflows and outflows related to the purchase and sale of equipment. The sale of old equipment for $20,000 is a cash inflow, while the purchase of new equipment for $25,000 is a cash outflow. The acquisition of additional equipment through a note payable does not impact cash flow since it's a non-cash transaction. Therefore, the net cash flow is $25,000 (outflow) - $20,000 (inflow) = $5,000 cash outflow.

Old Equipment Having a Book Value of $12,000 Was Sold