ACCA Financial Reporting (F7) Practice Exam 2026 – Complete Prep Guide

Cash flows from investing activities primarily encompass the cash transactions related to the acquisition or disposal of long-term assets. This includes cash spent on purchasing fixed assets like property, plant, and equipment, as well as cash received from selling these long-term assets. The focus is on investments that a company makes to support its long-term operational capabilities, which typically affects the company's future cash flow generation.

Understanding cash flows from investing activities is essential for assessing how much a company is investing in its long-term growth and the management of its asset base. The correct answer reflects the fundamental principles outlined in the International Financial Reporting Standards (IFRS) regarding the reporting of cash flows, emphasizing the importance of these activities in evaluating a company’s financial health and its strategy regarding capital investment.

In contrast, the other options do not accurately encapsulate the essence of investing activities. Transactions involving bank deposits pertain more to financing or operating activities rather than investing. Additionally, developing products generally relates to operational activities rather than direct investing cash flows, as investing activities focus more on capital expenditure. Lastly, cash received from sales is classified under operating activities, not investing activities, as it pertains to revenue-generating operations rather than capital asset management.