Question

Hugh Morris Comics sold for $110,000 cash a 3D printer that cost $334,000 with accumulated depreciation of $221,000. This transaction would be reported as:
A. An investing activity.
B. An operating activity.
C. None of these answer choices are correct.

Answer 1

Answer:

A. An investing activity.

Explanation:

In the statements of cash flows for a given period end, the difference between the opening and closing cash balances for a period is recognized in 3 buckets of activities. These are operating, investing and financing activities.

When an asset is sold for cash, the proceed received from the sale is recognized as an inflow of cash in the section of investing activities in the cash flow statements.