Zip Company entered into the following transactions during the year: ? Purchased stock for $200,000 ? Purchased electronic equipment for use on the manufacturing floor for $300,000 ? Paid dividends to shareholders of Zip Company in the amount of $800,000 The amount to be reported in the investing activities section of Zip’s statement of cash flows would be

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).