Investing activities are identified with changes in a corporation’s long-term assets. Investing activities are reported in a separate section of the financial statement Statement of Cash Flows (SCF)—also referred to as the cash flow statement

Examples of investing activities include the acquisition (purchase) of long-term investments, equipment used in the business, a building used in the business, and so on. The purchase of these long-term assets is shown as a negative amount in the investing activities section of the SCF, because the acquisition will use (will reduce) cash.

Investing activities also include the sale of long-term investments and the sale of long-term assets that had been used in the business. The proceeds (money received) from the sale of long-term assets will also be reported in the investing activities section of the cash flow statement. The money received will appear as a positive amount, since the effect on cash is positive. The sale is providing or increasing the company’s cash.

You can learn more about investing activities by reading the explanation of the Cash Flow Statement.

About the Author: Harold Averkamp (CPA) has worked as an accountant, consultant, and university accounting instructor for more than 25 years.

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