Question

What accounts on the balance sheet must be evaluated when completing the investing activities section of the statement of cash flows?

A) Accounts Receivable and Inventory
B) Cash and Cash Equivalents
C) Long-Term Assets, such as Property, Plant, and Equipment
D) Accounts Payable and Accru

Answer 1

To complete the investing activities section of the statement of cash flows, long-term assets like Property, Plant, and Equipment must be evaluated, as these indicate investment-related cash movements.

Step-by-step explanation:

When completing the investing activities section of the statement of cash flows, it is necessary to evaluate long-term assets such as Property, Plant, and Equipment (C) on the balance sheet. These items reflect the capital investments a company makes to support its business operations and are pivotal in understanding the cash inflows and outflows related to investment transactions. In contrast, current assets like Accounts Receivable and Inventory or the cash balance itself are related to operating activities, while liabilities such as Accounts Payable pertain to financing activities.

When completing the investing activities section of the statement of cash flows, the accounts on the balance sheet that need to be evaluated are Long-Term Assets, such as Property, Plant, and Equipment. These assets represent the investments made by the company for long-term use in its operations. Other accounts, such as Accounts Receivable, Inventory, Cash and Cash Equivalents, Accounts Payable, and Accrued Expenses, are more relevant to the operating and financing activities sections of the statement of cash flows.

Answer 2

The investing activities section of the statement of cash flows focuses on Long-Term Assets, such as Property, Plant, and Equipment, which reflect cash transactions involving long-term investments and assets.

Step-by-step explanation:

When completing the investing activities section of the statement of cash flows, the accounts on the balance sheet that must be evaluated are Long-Term Assets, such as Property, Plant, and Equipment. This section reflects the cash spent on or received from the sale and purchase of long-term assets and investments. It does not include current assets like Accounts Receivable and Inventory, nor does it include current liabilities such as Accounts Payable.

A bank's balance sheet, which lists assets and liabilities, can help illustrate investing activities. For instance, when a bank purchases U.S. treasury bonds, it is an investing activity since the bonds are classified as a long-term asset.When completing the investing activities section of the statement of cash flows, the accounts on the balance sheet that must be evaluated are Long-Term Assets, such as Property, Plant, and Equipment.

These long-term assets represent investments made by the company in order to generate future income and profits. By evaluating changes in these accounts, we can determine the cash flow resulting from the buying, selling, or disposal of these assets.