Question

What is meant by investment activities. Discuss different categories of investment.

Answer 1

As per accounting terminology investing activities involves cash flow due to investment or sale of fixed assets, investment in net working capital in a stipulated period
Different categories off investments are
1. Investing in fixed assets: Investing in fixed assets decreases cash flow and sales of fixed asset increases cash flow. This include purchase and sale so plant machinery and equipment./

2. Investment in working capital: Investment in inventory , account receivable and account payable come under investment in working capital.
Investment in working capital reduces cash flow

3. Investing in other securities: Investment in other securities apart from operations reduces cash flow