Additions to tangible assets, intangible assets, and current assets can be described as:

Question

Quizplus · Accepted Answer

Additions to tangible assets (such as machinery, equipment, and buildings), intangible assets (such as patents, trademarks, and goodwill), and current assets (such as inventory and accounts receivable) represent cash outflows associated with investments. These cash outflows could be financed either through operating cash flows generated from the company's ongoing activities or through external financing, such as debt or equity issuances. Therefore, the cash flows associated with investments (option A) are appropriate to describe such additions. Operating cash flows (option B) represent the cash inflows and outflows resulting from a company's core operations, while free cash flows (option C) reflect the amount of cash available to the company after accounting for all capital expenditures required to maintain or expand its asset base. Neither of these options appropriately describes the nature of additions to tangible, intangible, or current assets.

Additions to Tangible Assets, Intangible Assets, and Current Assets Can