Investing Activities definitions Flashcards
Investing Activities definitions
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Investing Activities Section of the cash flow statement focused on transactions involving long-term assets such as equipment, land, and investments. Long-term Assets Resources like equipment, land, and buildings expected to provide benefits for more than one year and tracked in investing activities. Plant Assets Tangible long-term resources such as equipment and buildings used in operations and subject to depreciation. Intangibles Non-physical long-term resources like patents or trademarks, included in investing activities when bought or sold. Cash Inflow Money received from selling long-term assets or investments, recorded in the investing section of the cash flow statement. Cash Outflow Money paid to acquire long-term assets or investments, shown as a negative amount in the investing section. Journal Entry Accounting record that documents the details of asset sales, including cash received, cost, and accumulated depreciation. Historical Cost Original purchase price of a long-term asset, used in journal entries to remove the asset from the books upon sale. Accumulated Depreciation Total depreciation recorded against a long-term asset, reducing its book value and removed when the asset is sold. Contra Asset Account that offsets a related asset account, such as accumulated depreciation reducing the value of equipment. Gain on Sale Excess of proceeds over the book value when a long-term asset is sold, recorded as a credit in the journal entry. Loss on Sale Shortfall when proceeds from selling a long-term asset are less than its book value, recorded as a debit in the journal entry. Depreciation Expense Periodic allocation of an asset’s cost over its useful life, increasing accumulated depreciation each period. Book Value Net amount of an asset on the books, calculated as historical cost minus accumulated depreciation. Cash Flow Statement Financial report summarizing cash inflows and outflows from operating, investing, and financing activities.