Question

under gaap, how would the sale of company - owned land be accounted for on the statement of cash flows?

as a decrease in cash flow from operations

as an increase in cash flow from investment

as a decrease in cash flow from financing

as an increase in cash flow from operations

Explanation:

Under GAAP, the statement of cash flows has three sections: operating, investing, and financing. Investing activities involve the purchase or sale of long - term assets (like land, which is a long - term asset). When a company sells its owned land, it receives cash. This cash inflow is related to the sale of a long - term asset, so it is classified as an increase in cash flow from investing activities.

• The first option is wrong because operating activities are about the main revenue - generating operations, not the sale of long - term assets.
• The third option is wrong as financing activities are related to capital structure (like issuing stock or taking loans), not asset sales.
• The fourth option is wrong as operating activities don't include long - term asset sales.

Answer:

B. As an increase in cash flow from investment