Final answer:
Money received from selling equipment no longer used in operations is classified as 'investing activities' on the statement of cash flows. This section reflects how the company manages its investment assets and the impact on cash reserves.
Step-by-step explanation:
When a company sells equipment that is no longer used in operations, the money received from the sale is classified on the company’s statement of cash flows. This transaction is typically recorded in the investing activities section. The sale of equipment is not part of the company’s primary operations, so it is not listed under operating activities. Instead, it is considered an investment in the business asset that has now been liquidated.
The cash inflow from selling old equipment could help the company invest in other strategic areas or pay off debts, making it a vital indicator of the firm’s financial agility. It’s essential to report such transactions accurately for investors and creditors to understand how the company manages its investment assets and how it may affect cash reserves.