Practicing Success

Target Exam

CUET

Subject

Accountancy

Chapter

Cash Flow Statement

Question:

'Purchase of machinery for cash' is which type of activity in the cash flow statement?

Options:

Operating activity

Investing activity

Financing activity

None of these

Correct Answer:

Investing activity

Explanation:

Cash Outflows from investing activities
 Cash payments to acquire fixed assets including intangibles and capitalised research and development.
 Cash payments to acquire shares, warrants or debt instruments of other enterprises other than the instruments those held for trading purposes.
 Cash advances and loans made to third party (other than advances and loans made by a financial enterprise wherein it is operating activities).