Classification of Cash Flows in a Cash Flow Statement

Very Hard Financial Statements Cash Flow Statement

XYZ Technologies reported the following item in its cash flow statement for the fiscal year ending December 31, 2023. The company noted significant gains from the sale of a piece of machinery that was used in its manufacturing process. In addition, the company incurred cash outflows related to research and development (R&D) projects aimed at enhancing product innovation.

Given this information, which of the following is true regarding how the cash flows from these activities would be classified in the cash flow statement?

The cash inflow from the sale of machinery is classified under operating activities, while the cash outflows for R&D are classified under investing activities.

Both the cash inflow from the sale of machinery and the cash outflows for R&D projects are classified under investing activities.

The cash inflow from the sale of machinery is classified under investing activities, and the cash outflows for R&D are classified under operating activities.

Hint

Submitted3.0K

Correct2.8K

% Correct95%