Answer (B) is correct . The statement of cash flows classifies an enterprise’s cash flows into three categories. Investing activities typically include the purchase and sale of securities of other entities and the purchase and sale of property, plant, and equipment. Thus, the amount to be reported in the investing activities section of Zip’s statement of cash flows is $500,000 ($200,000 + $300,000). purchased stock is an investment.
Answer (A) is incorrect because The amount of $200,000 results from failing to include the purchase of manufacturing equipment.
Answer (C) is incorrect because The amount of $800,000 is the cash flows from financing activities.
Answer (D) is incorrect because The amount of $1,300,000 results from improperly including the dividend payment.
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The amount to be reported in the investing activities section of Zip’s statement of cash flows would be
