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    Question

    Which of the following would be considered a 'cash-flow

    item from an "investing" activity'?
    A Cash outflow to the government for taxes. Correct Answer Incorrect Answer
    B Cash outflow to purchase bonds issued by another company. Correct Answer Incorrect Answer
    C Cash outflow to shareholders as dividends. Correct Answer Incorrect Answer
    D Cash outflow to payment of interest on bonds Correct Answer Incorrect Answer
    E None of the above Correct Answer Incorrect Answer

    Solution

    Cash outflows related to the purchase of bonds issued by another company are considered as cash-flow items from an "investing" activity on the cash flow statement. Investing activities involve the acquisition or disposal of long-term assets and other investments, such as stocks, bonds, and real estate.

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