Question

If a loss of $25,000 is incurred in selling (for cash) office equipment having a book value of $90,000, the total amount reported in the cash flows from investing activities section of the statement of cash flows is:a) 65,000b) 90,000c) 115,000d) 25,000

Answer 1

Answer:

a) 65,000

Explanation:

Basically there are three types of activities:

1. Operating activities: It includes those transactions which affect the working capital, and it records transactions of cash receipts and cash payments.

2. Investing activities: It records those activities which include purchase and sale of the fixed assets

3. Financing activities: It records those activities which affect the long term liability and shareholder equity balance.  

The total amount which is reported under the investing activities are shown below:

= Book value of office equipment - loss incurred in selling office equipment

= $90,000 - $25,000

= $65,000