Consider the following cash flow items: Pay amount owed to bank for previous borrowing.
Pay utility costs.
Purchase equipment to be used in operations.
Purchase office supplies.
Pay one year of rent in advance.
Pay workers' salaries.
Pay for research and development costs.
Pay taxes to the IRS.
Sell common stock to investors.
How many of these cash flow items involve investing activities?

Question

Quizplus · Accepted Answer

The cash flow item that involves investing activity is "Purchase equipment to be used in operations." Investing activities involve acquiring and disposing of long-term assets that are used in the business. The other cash flow items are either operating activities (such as paying expenses like rent, salaries, and taxes) or financing activities (such as borrowing from a bank or selling stock to investors).

Consider the Following Cash Flow Items: Pay Amount Owed to Bank