{"id":644,"date":"2018-04-19T20:29:32","date_gmt":"2018-04-19T20:29:32","guid":{"rendered":"https:\/\/courses.lumenlearning.com\/wm-accountingformanagers\/?post_type=chapter&#038;p=644"},"modified":"2024-04-29T17:35:52","modified_gmt":"2024-04-29T17:35:52","slug":"investing-activities","status":"publish","type":"chapter","link":"https:\/\/courses.lumenlearning.com\/wm-accountingformanagers\/chapter\/investing-activities\/","title":{"raw":"Investing Activities","rendered":"Investing Activities"},"content":{"raw":"<div class=\"textbox learning-objectives\">\r\n<h3>Learning Outcomes<\/h3>\r\n<ul>\r\n \t<li>Identify cash flows that result from investing activities<\/li>\r\n<\/ul>\r\n<\/div>\r\nThe second section of the cash flow statement involves investing activities. We will again be chatting about <strong>inflows<\/strong> and <strong>outflows\u00a0<\/strong>as it relates to investments.\r\n<div class=\"textbox key-takeaways\">\r\n<h3>Learn More<\/h3>\r\nWatch this video to get an explanation of the investing activities part of the cash flow statement:\r\n\r\n<iframe src=\"\/\/plugin.3playmedia.com\/show?mf=7494713&amp;p3sdk_version=1.10.1&amp;p=20361&amp;pt=375&amp;video_id=6lmi4nz1Sl0&amp;video_target=tpm-plugin-s01i770i-6lmi4nz1Sl0\" width=\"800px\" height=\"450px\" frameborder=\"0\" marginwidth=\"0px\" marginheight=\"0px\"><\/iframe>\r\n\r\n<\/div>\r\nWhat happens when we buy an asset? Let\u2019s say we buy a truck for our business. As we discussed earlier, we put the purchase price of the truck as an asset on our balance sheet, then we take small amounts as an expense each month as depreciation to spread the expense out over time. If we purchased the truck for $25,000, from a cash perspective, we had a $25,000 <strong>outflow<\/strong>, right? So even though the truck goes to the balance sheet, we need to note the <strong>entire purchase<\/strong> price (if we paid cash) on our cash flow statement.\r\n\r\nNow we sold a truck for cash! We will remove the truck from the balance sheet, and stop the depreciation, but whatever we received in cash for the truck will show up on our investing section on our cash flow statement. This will be an <strong>inflow<\/strong>.\r\n\r\nWe might also buy stock (cash outflow) or sell stock (cash inflow). Maybe we lend money to another company (cash outflow) or collect money on a loan we previously gave (cash inflow).\r\n\r\nSo if you invest in property, plant, equipment, stocks, bonds or another company, these are all investment activities on your cash flow statement. Here is a little chart to help make this a little easier:\r\n<table style=\"height: 105px;\" border=\"1\">\r\n<tbody>\r\n<tr style=\"height: 15px;\">\r\n<td style=\"height: 15px;\"><strong>Description<\/strong><\/td>\r\n<td style=\"height: 15px;\"><strong>Inflow<\/strong><\/td>\r\n<td style=\"height: 15px;\"><strong>Outflow<\/strong><\/td>\r\n<\/tr>\r\n<tr style=\"height: 15px;\">\r\n<td style=\"height: 15px;\">Buy assets (property, plant, or equipment)<\/td>\r\n<td style=\"height: 15px; text-align: center;\"><\/td>\r\n<td style=\"height: 15px; text-align: center;\">X<\/td>\r\n<\/tr>\r\n<tr style=\"height: 15px;\">\r\n<td style=\"height: 15px;\">Sell assets<\/td>\r\n<td style=\"height: 15px; text-align: center;\">X<\/td>\r\n<td style=\"height: 15px; text-align: center;\"><\/td>\r\n<\/tr>\r\n<tr style=\"height: 15px;\">\r\n<td style=\"height: 15px;\">Buy stocks, bonds, or other investments<\/td>\r\n<td style=\"height: 15px; text-align: center;\"><\/td>\r\n<td style=\"height: 15px; text-align: center;\">X<\/td>\r\n<\/tr>\r\n<tr style=\"height: 15px;\">\r\n<td style=\"height: 15px;\">Sell stocks, bonds, or other investments<\/td>\r\n<td style=\"height: 15px; text-align: center;\">X<\/td>\r\n<td style=\"height: 15px; text-align: center;\"><\/td>\r\n<\/tr>\r\n<tr style=\"height: 15px;\">\r\n<td style=\"height: 15px;\">Lend money<\/td>\r\n<td style=\"height: 15px; text-align: center;\"><\/td>\r\n<td style=\"height: 15px; text-align: center;\">X<\/td>\r\n<\/tr>\r\n<tr style=\"height: 15px;\">\r\n<td style=\"height: 15px;\">Collect principal on money you lent<\/td>\r\n<td style=\"height: 15px; text-align: center;\">X<\/td>\r\n<td style=\"height: 15px; text-align: center;\"><\/td>\r\n<\/tr>\r\n<\/tbody>\r\n<\/table>\r\n<div class=\"textbox tryit\">\r\n<h3>Practice Questions<\/h3>\r\nhttps:\/\/assess.lumenlearning.com\/practice\/3a0fb1ec-cfc6-4ce9-89fe-556b645356fb\r\n<\/div>","rendered":"<div class=\"textbox learning-objectives\">\n<h3>Learning Outcomes<\/h3>\n<ul>\n<li>Identify cash flows that result from investing activities<\/li>\n<\/ul>\n<\/div>\n<p>The second section of the cash flow statement involves investing activities. We will again be chatting about <strong>inflows<\/strong> and <strong>outflows\u00a0<\/strong>as it relates to investments.<\/p>\n<div class=\"textbox key-takeaways\">\n<h3>Learn More<\/h3>\n<p>Watch this video to get an explanation of the investing activities part of the cash flow statement:<\/p>\n<p><iframe loading=\"lazy\" src=\"\/\/plugin.3playmedia.com\/show?mf=7494713&amp;p3sdk_version=1.10.1&amp;p=20361&amp;pt=375&amp;video_id=6lmi4nz1Sl0&amp;video_target=tpm-plugin-s01i770i-6lmi4nz1Sl0\" width=\"800px\" height=\"450px\" frameborder=\"0\" marginwidth=\"0px\" marginheight=\"0px\"><\/iframe><\/p>\n<\/div>\n<p>What happens when we buy an asset? Let\u2019s say we buy a truck for our business. As we discussed earlier, we put the purchase price of the truck as an asset on our balance sheet, then we take small amounts as an expense each month as depreciation to spread the expense out over time. If we purchased the truck for $25,000, from a cash perspective, we had a $25,000 <strong>outflow<\/strong>, right? So even though the truck goes to the balance sheet, we need to note the <strong>entire purchase<\/strong> price (if we paid cash) on our cash flow statement.<\/p>\n<p>Now we sold a truck for cash! We will remove the truck from the balance sheet, and stop the depreciation, but whatever we received in cash for the truck will show up on our investing section on our cash flow statement. This will be an <strong>inflow<\/strong>.<\/p>\n<p>We might also buy stock (cash outflow) or sell stock (cash inflow). Maybe we lend money to another company (cash outflow) or collect money on a loan we previously gave (cash inflow).<\/p>\n<p>So if you invest in property, plant, equipment, stocks, bonds or another company, these are all investment activities on your cash flow statement. Here is a little chart to help make this a little easier:<\/p>\n<table style=\"height: 105px;\">\n<tbody>\n<tr style=\"height: 15px;\">\n<td style=\"height: 15px;\"><strong>Description<\/strong><\/td>\n<td style=\"height: 15px;\"><strong>Inflow<\/strong><\/td>\n<td style=\"height: 15px;\"><strong>Outflow<\/strong><\/td>\n<\/tr>\n<tr style=\"height: 15px;\">\n<td style=\"height: 15px;\">Buy assets (property, plant, or equipment)<\/td>\n<td style=\"height: 15px; text-align: center;\"><\/td>\n<td style=\"height: 15px; text-align: center;\">X<\/td>\n<\/tr>\n<tr style=\"height: 15px;\">\n<td style=\"height: 15px;\">Sell assets<\/td>\n<td style=\"height: 15px; text-align: center;\">X<\/td>\n<td style=\"height: 15px; text-align: center;\"><\/td>\n<\/tr>\n<tr style=\"height: 15px;\">\n<td style=\"height: 15px;\">Buy stocks, bonds, or other investments<\/td>\n<td style=\"height: 15px; text-align: center;\"><\/td>\n<td style=\"height: 15px; text-align: center;\">X<\/td>\n<\/tr>\n<tr style=\"height: 15px;\">\n<td style=\"height: 15px;\">Sell stocks, bonds, or other investments<\/td>\n<td style=\"height: 15px; text-align: center;\">X<\/td>\n<td style=\"height: 15px; text-align: center;\"><\/td>\n<\/tr>\n<tr style=\"height: 15px;\">\n<td style=\"height: 15px;\">Lend money<\/td>\n<td style=\"height: 15px; text-align: center;\"><\/td>\n<td style=\"height: 15px; text-align: center;\">X<\/td>\n<\/tr>\n<tr style=\"height: 15px;\">\n<td style=\"height: 15px;\">Collect principal on money you lent<\/td>\n<td style=\"height: 15px; text-align: center;\">X<\/td>\n<td style=\"height: 15px; text-align: center;\"><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<div class=\"textbox tryit\">\n<h3>Practice Questions<\/h3>\n<p>\t<iframe id=\"assessment_practice_3a0fb1ec-cfc6-4ce9-89fe-556b645356fb\" class=\"resizable\" src=\"https:\/\/assess.lumenlearning.com\/practice\/3a0fb1ec-cfc6-4ce9-89fe-556b645356fb?iframe_resize_id=assessment_practice_id_3a0fb1ec-cfc6-4ce9-89fe-556b645356fb\" frameborder=\"0\" style=\"border:none;width:100%;height:100%;min-height:300px;\"><br \/>\n\t<\/iframe>\n<\/div>\n\n\t\t\t <section class=\"citations-section\" role=\"contentinfo\">\n\t\t\t <h3>Candela Citations<\/h3>\n\t\t\t\t\t <div>\n\t\t\t\t\t\t <div id=\"citation-list-644\">\n\t\t\t\t\t\t\t <div class=\"licensing\"><div class=\"license-attribution-dropdown-subheading\">CC licensed content, Original<\/div><ul class=\"citation-list\"><li>Investing Activities. <strong>Authored by<\/strong>: Freedom Learning Group. <strong>Provided by<\/strong>: Lumen Learning. <strong>License<\/strong>: <em><a target=\"_blank\" rel=\"license\" href=\"https:\/\/creativecommons.org\/licenses\/by\/4.0\/\">CC BY: Attribution<\/a><\/em><\/li><\/ul><div class=\"license-attribution-dropdown-subheading\">All rights reserved content<\/div><ul class=\"citation-list\"><li>Cash Flow from Investing (Statement of Cash Flows). <strong>Authored by<\/strong>: Edspira. <strong>Located at<\/strong>: <a target=\"_blank\" href=\"https:\/\/www.youtube.com\/watch?v=6lmi4nz1Sl0\">https:\/\/www.youtube.com\/watch?v=6lmi4nz1Sl0<\/a>. <strong>License<\/strong>: <em>All Rights Reserved<\/em>. <strong>License Terms<\/strong>: Standard YouTube License<\/li><\/ul><\/div>\n\t\t\t\t\t\t <\/div>\n\t\t\t\t\t <\/div>\n\t\t\t <\/section>","protected":false},"author":62559,"menu_order":5,"template":"","meta":{"_candela_citation":"[{\"type\":\"original\",\"description\":\"Investing Activities\",\"author\":\"Freedom Learning Group\",\"organization\":\"Lumen Learning\",\"url\":\"\",\"project\":\"\",\"license\":\"cc-by\",\"license_terms\":\"\"},{\"type\":\"copyrighted_video\",\"description\":\"Cash Flow from Investing (Statement of Cash Flows)\",\"author\":\"Edspira\",\"organization\":\"\",\"url\":\"https:\/\/www.youtube.com\/watch?v=6lmi4nz1Sl0\",\"project\":\"\",\"license\":\"arr\",\"license_terms\":\"Standard YouTube License\"}]","CANDELA_OUTCOMES_GUID":"be938171-ebc9-47a7-9bb9-5e222a8d47bb, 5cd5a9b3-3f69-45c4-8495-ae44b0adefbd","pb_show_title":"on","pb_short_title":"","pb_subtitle":"","pb_authors":[],"pb_section_license":""},"chapter-type":[],"contributor":[],"license":[],"class_list":["post-644","chapter","type-chapter","status-publish","hentry"],"part":112,"_links":{"self":[{"href":"https:\/\/courses.lumenlearning.com\/wm-accountingformanagers\/wp-json\/pressbooks\/v2\/chapters\/644","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/courses.lumenlearning.com\/wm-accountingformanagers\/wp-json\/pressbooks\/v2\/chapters"}],"about":[{"href":"https:\/\/courses.lumenlearning.com\/wm-accountingformanagers\/wp-json\/wp\/v2\/types\/chapter"}],"author":[{"embeddable":true,"href":"https:\/\/courses.lumenlearning.com\/wm-accountingformanagers\/wp-json\/wp\/v2\/users\/62559"}],"version-history":[{"count":12,"href":"https:\/\/courses.lumenlearning.com\/wm-accountingformanagers\/wp-json\/pressbooks\/v2\/chapters\/644\/revisions"}],"predecessor-version":[{"id":4162,"href":"https:\/\/courses.lumenlearning.com\/wm-accountingformanagers\/wp-json\/pressbooks\/v2\/chapters\/644\/revisions\/4162"}],"part":[{"href":"https:\/\/courses.lumenlearning.com\/wm-accountingformanagers\/wp-json\/pressbooks\/v2\/parts\/112"}],"metadata":[{"href":"https:\/\/courses.lumenlearning.com\/wm-accountingformanagers\/wp-json\/pressbooks\/v2\/chapters\/644\/metadata\/"}],"wp:attachment":[{"href":"https:\/\/courses.lumenlearning.com\/wm-accountingformanagers\/wp-json\/wp\/v2\/media?parent=644"}],"wp:term":[{"taxonomy":"chapter-type","embeddable":true,"href":"https:\/\/courses.lumenlearning.com\/wm-accountingformanagers\/wp-json\/pressbooks\/v2\/chapter-type?post=644"},{"taxonomy":"contributor","embeddable":true,"href":"https:\/\/courses.lumenlearning.com\/wm-accountingformanagers\/wp-json\/wp\/v2\/contributor?post=644"},{"taxonomy":"license","embeddable":true,"href":"https:\/\/courses.lumenlearning.com\/wm-accountingformanagers\/wp-json\/wp\/v2\/license?post=644"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}