[amp_mcq option1=”Cash inflow from interest income” option2=”Cash inflow from dividend income” option3=”Cash outflow to acquire fixed assets” option4=”All of the above” correct=”option3″]
The correct answer is C. Cash outflow to acquire fixed assets.
Investing activities are those that involve the acquisition and disposal of long-term assets. Examples of investing activities include:
- Acquiring land, buildings, and equipment
- Selling land, buildings, and equipment
- Making loans to other entities
- Collecting loans from other entities
Cash inflow from interest income and cash inflow from dividend income are classified as operating activities. Operating activities are those that involve the day-to-day running of a business. Examples of operating activities include:
- Selling goods and services
- Collecting cash from customers
- Paying suppliers for goods and services
- Paying employees
Therefore, the only option that is an investing activity is C. Cash outflow to acquire fixed assets.