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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.