Question

When equipment is sold for cash, the amount received is reflected as a cash :_________ a) inflow in the operating section. b) inflow in the financing section. c) inflow in the investing section. d) outflow in the operating section.

Answer 1

Answer: c. inflow in the investing section

Step-by-step explanation:

The cash flow statement is prepared in order to determine the ending cash balance which is done by considering the cash that's generated from various activities of the business.

Equipment is regarded as a long term asset, and therefore when it's sold for cash, it's being regarded as an indicator for investing activities section.