Question

Xanthe Corporation had the following transactions occur in the current year:

1 Cash sale of merchandise inventory.
2 Sale of delivery truck at book value.
3 Sale of Xanthe common stock for cash.
4 Issuance of a note payable to a bank for cash.
5 Sale of a security held as an available-for-sale investment.
6 Collection of loan receivable.
How many of the above items will appear as a cash inflow from investing activities on a statement of cash flows for the current year?
a. Five items
b. Four items
c. Three items
d. Two items

Answer 1

Only two of the listed transactions, the sale of a delivery truck at book value and the sale of a security held as an available-for-sale investment, would appear as cash inflows from investing activities in the statement of cash flows.

Step-by-step explanation:

The question is identifying how many of the listed transactions will appear as a cash inflow from investing activities on a statement of cash flows for the current year. On a statement of cash flows, investing activities typically include transactions involving the sale or purchase of long-term assets and investments.

• Sale of delivery truck at book value.
• Sale of a security held as an available-for-sale investment.

These two items would be classified as cash inflows from investing activities, whereas the other transactions mentioned would fall under operating or financing activities.

Therefore, the answer to the question is (d) Two items.