Which of the following is an investing activity?

• A. Purchasing land
• B. Paying dividends
• C. Issuing stock
• D. Paying salaries

Answer: (A)

Investing activities reflect cash flows related to acquiring and disposing of long-term assets and investments. Purchasing land fits this category because land is a long-lived asset, and acquiring it represents an investment in the company’s productive capacity rather than an expense or a financing action. By contrast, paying salaries is part of operating activities since it relates to daily operations; issuing stock and paying dividends are financing activities because they involve raising or returning capital to owners. So, purchasing land is the investing activity.