A company had the following cash flows for the year:
(a)Purchased inventory,$60,000
(b)Sold goods to customers,$90,000
(c)Received loan from a local bank,$150,000
(d)Purchased land,$180,000
(e)Purchased treasury stock,$40,000
(f)Paid dividends,$10,000
(g)Sold delivery truck,$30,000
What amount would be reported for net investing cash flows on the Statement of Cash Flows?
A)($150,000).
B)($180,000).
C)$30,000.

Question

A company had the following cash flows for the year: 
(a)Purchased inventory,$60,000
(b)Sold goods to customers,$90,000
(c)Received loan from a local bank,$150,000
(d)Purchased land,$180,000
(e)Purchased treasury stock,$40,000
(f)Paid dividends,$10,000
(g)Sold delivery truck,$30,000
What amount would be reported for net investing cash flows on the Statement of Cash Flows?
A)($150,000).
B)($180,000).
C)$30,000.

Quizplus · Accepted Answer

Net investing cash flows include cash flows related to the purchase and sale of long-term assets and investments. Here, purchasing land ($180,000) and treasury stock ($40,000) are outflows, and selling the delivery truck ($30,000) is an inflow. Thus, net investing cash flows = -$180,000 - $40,000 + $30,000 = -$190,000. However, purchasing treasury stock is actually a financing activity, not an investing activity. Correcting this, net investing cash flows only include the land purchase and truck sale, so -$180,000 + $30,000 = -$150,000.

A Company Had the Following Cash Flows for the Year