A company received Rs. 45,000 cash on the sale of a delivery van. Under the cash flow statement, this cash inflow should be classified under which activity?
Answer
Investing activities
The correct answer is Investing activities — Therefore, the cash received is classified under investing activities.
Step-by-step solution
- Identify the nature of the transaction: cash received from selling a fixed asset (delivery van).
- Cash inflows from the sale of long‑term assets are part of investing activities.
- Therefore, the cash received is classified under investing activities.
Common mistake: Treating cash received from sale of equipment as operating activity
Concept tested: Classification of cash flows
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