What activities does a company engage in when it involves the purchase and sale of long-term assets using cash?

When it comes to the purchase and sale of long-term assets, the correct classification falls under investing activities. This is because investing activities involve transactions related to the acquisition or disposal of physical assets, such as property, plant, and equipment (PP&E), as well as investments in securities that are intended to be held for the long term.

When a company purchases long-term assets, it is essentially investing in the future operations of the business, expecting to generate revenue through their use over time. Similarly, when a company sells these assets, it is effectively converting its investment back into cash, which can then be reinvested or used for other operational purposes.

This distinction is important in financial statements, as it allows users to understand how a company is utilizing its resources for future growth versus its current operational efficiency. Meanwhile, operating activities are primarily focused on the core day-to-day functions of the business, financing activities relate to how a company funds its operations and growth (through borrowing or issuing shares), and non-cash activities do not directly involve cash transactions, such as trading one asset for another.

Thus, the classification of cash used for purchasing and selling long-term assets as investing activities is fundamental for accurately evaluating a company's financial health and strategic decisions.