Question

Use of cash to underrate a capital expenditure in an organisation involves an outflow of cash. This transaction will be reflected in the Cash Flow Statement under which of the activities?

Q: Answer-Use of cash to underrate a capital expenditure in an organisation involves an outflow of cash. This...

Cash flow from acquisition andor disposal of long- term assets like equipment, assets or investments, relate to cash from investing. Usually cash changes from investing are a cash out item, because cash is used to buy new equipment, buildings or short-term assets such as marketable securities. However, when a company divests off an asset, the transaction is considered cash in for calculating cash from investing.