See "Break Apart" for more context on this... but in essence, we need to move the $200 of "Gain on Sale of Land" out of "Net Income" (an operating activity) and into "Sale of Land" (an investing activity).
That's because that $200 technically was associated with the "Sale of Land", not "Net Income".
Since the "Gain on Sale of Land" part is coming out of "Net Income" (an operating activity), we'll file it as an operating activity.
Investing
Investing activities deal with long-term assets that will contribute to future returns.
Now, let's walk through the two investing activities and explain why they're investing activities!
Equipment is a long-term asset that we use to generate value for our business over time. Without it, we often cannot produce our end product, which contributes to our ability to generate returns!
Land is a long-term asset that helps us generate value for our company. Whether it's to hold our company headquarters, store equipment, etc., we often need land to provide value for our business!
Therefore, it's an investing activity!
Financing
Financing activities deal with borrowing money, as well as anything pertaining to stocks or dividends.
Now, let's walk through the two financing activities and explain why they're financing activities!
