Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

7. Receivables and Investments

Introduction to Investments in Securities

Financial Accounting

7. Receivables and Investments

Introduction to Investments in Securities

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Multiple Choice

Which of the following is typically classified as an investing cash flow on the statement of cash flows?

Payment of salaries

Payment of dividends

Issuance of common stock

Purchase of equipment

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Verified step by step guidance

Understand the classification of cash flows: The statement of cash flows categorizes cash flows into three main activities: operating, investing, and financing. Investing cash flows typically involve transactions related to the acquisition or disposal of long-term assets and investments.

Analyze the options provided: Payment of salaries is an operating cash flow because it relates to day-to-day business operations. Payment of dividends is a financing cash flow because it involves returning capital to shareholders. Issuance of common stock is also a financing cash flow as it pertains to raising capital.

Focus on the correct answer: Purchase of equipment is classified as an investing cash flow because it involves acquiring a long-term asset that will be used in the business operations.

Relate the purchase of equipment to the definition of investing activities: Investing activities include cash flows from the purchase or sale of property, plant, and equipment, as well as other long-term investments. Equipment falls under this category.

Conclude the classification: The purchase of equipment is a typical example of an investing cash flow, as it represents an outflow of cash to acquire a long-term asset that contributes to the company's operations over time.