Final answer:
The cash flow effects of buying and selling property, plant, and equipment are reported under Investing activities in a statement of cash flows.
Step-by-step explanation:
The category on a statement of cash flows used to report the cash flow effects of buying and selling property, plant, and equipment is Investing activities. This section reflects the cash used in or generated from the purchase and sale of long-term assets and investments, not related to the core operations of the business.
Investing activities include transactions that are made for the purpose of reinvesting in the business to promote growth and profitability. These can involve the acquisition or disposal of physical assets, or investments such as stocks and bonds, among other things. When a firm decides to buy a machine that will last for years or build a new plant, they are engaging in investing activities with the expectation of future profits.
While Operating activities involve cash flows directly related to earning income, such as revenue from sales and expenses for supplies, and Financing activities deal with the exchanges of cash between the company and its owners and creditors, such as issuing stock or borrowing money. Profit activities is not a recognized category in the context of a cash flow statement.