Question

A firm's purchase of plant and equipment would be considered a

A.  use of cash for financing activities.

B.  use of cash for operating activities.

C.  source of cash for operating activities.

D.  use of cash for investment activities.

Answer 1

Option a, use of cash for financing activities is the cash flow used to fund the business.

Option b, use of cash for operating activities is the cash flow payments paid and received to run the business.

Option c, souce of cash for operating activities is the cash flow from the normal business activity of buying and selling goods and services.

Option d, use of cash for investment activities is the cash flow from purchase of assets.

Hence, the answer is option d.

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