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Cash flows from investing do not include cash flows from: multiple choice

a. lending money to another corporation.
b. the purchase of other corporation's securities.
c. borrowing.
d. the sale of equipment.

1 Answer

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Final answer:

The sale of equipment is indeed part of a company's cash flows from investing activities. It results in cash inflows that can be used for reinvestment or other purposes, and as such, should be considered a positive cash flow from investing.

Step-by-step explanation:

Cash flows from investing activities are part of a company's cash flow statement which tracks the amount of money entering and leaving a company. These activities typically include the purchase and sale of long-term assets such as property, plant, and equipment or investment securities. When a company reinvests its profits into buying new equipment, expanding operations, or upgrading technology, these outlays are recorded as negative cash flows from investing activities. Conversely, when a company sells equipment, it's considered a positive cash flow from investing because it results in cash coming into the business.

Therefore, the sale of equipment does constitute a cash flow from investing activities. In fact, the choice D from the multiple-choice options provided in the student's question, which refers to the sale of equipment, is an important part of investing cash flows because it typically represents cash inflows for a company. The sale of equipment provides funds that can be used for further reinvesting into the business or other purposes.

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