Question

Classify the following activity into operating activities, investing activities, financing activities or cash activities

"Purchase of machinery"

Options

• Operating activities

• Investing activities

• Financing activities

• Cash activities

Answer 1

Investing activities

Explanation:

Investing operations include the purchase and selling of long-term assets such as machinery, furniture, land, and buildings, among other things. Long-term investment transactions are also investing activities. Investing operations, according to AS-3, are the acquisition and disposition of long-term assets and other investments that are not included in cash equivalents.