A firm’s purchase of plant and equipment would be considered a?

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A firm’s purchase of plant and equipment would be considered a

OPTIONS ARE:

A) use of cash for financing activities.

B) use of cash for operating activities.

C) source of cash for investment activities.

D) use of cash for investment activities.

2 Answers

  • D. The purchase of PP&E is an outflow (use) of cash and is considered an investing activity on the statement of cash flows.

    • The sale or purchase of long-term assets is considered an investing activity and not an operating activity. And yes, PP&E is considered a capital asset but that has no bearing on its classification; it is definitely an investment activity.
  • B

    it is capital investment

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