FINANCE al Review Questions ch 23 5 Question 14 of 30 John d

FINANCE al Review Questions (ch. 2,3, 5) Question 14 (of 30) John doesn\'t understand where each cash flow goes on the statement of cash flows, or how eacth item impacts the cash balance. You explain that when assets go up, this is a use of cash. When liabilities go up, this is a source of cash. An increose in gross fixed assets, for instance, wi the cash flow fronm activities O Decrease nvestment. O Increse operating O increase, tinancing O Increase, investment Increase, purchasing. Decrease financing O Decrease operating

Solution

A.Decrease , Investment

an increase in gross fixed assets means cash flows have been used up to invest in fixed assets.

So the purchase of fixed assets will decrease the cashflow and such purchase of fixed assets results in investing activities.