Question

Two years ago, your company bought $45,000 in bonds from another company.

This month, it sold half of those bonds for $21,540 and purchased the common stock of another company for $1,450.

On the statement of cash flows for this accounting period, your company would report a net cash:

a) inflow of $21,540 from investing activities.

b) inflow of $20,090 from investing activities.

c) outflow of $20,090 from investing activities.

d) outflow of $21,540 from investing activities.

Answer 1

b) inflow of $20,090 from investing activities.

Step-by-step explanation:

Net cash flow from Investing activities including all the cash inflows and outflows made again the investment in fixed asset.

Cash paid for investment in fixed asset is cash outflow from investing activities and Cash received from investment in fixed asset is cash inflow from investing activities.

Investment in Bonds and Common stock of another company are also considered as investment in fixed assets.

Cash Received Against the sale of Bond $21,540

Cash paid to buy the common stock ($1,450)

Net cash Inflow from investing activities $20,090