Question

‘Sale of Patents’ will result in ______.

Options

• Cash outflows from Investing Activities

• Cash inflows from Investing Activities

• Cash inflows from Financing Activities

• Cash inflows from Operating Activities

Answer 1

‘Sale of Patents’ will result in cash inflows from Investing Activities.

Explanation:

A patent is an intangible fixed asset (a long-term asset), and any transaction involving the sale or disposal of long-term assets is classified under Investing Activities. Since selling the patent brings money into the company, it results in a cash inflow. This rules out financing or operating activities, which deal with capital structure and day-to-day operations, respectively, as well as outflows, which mean spending money.