ACCA Financial Reporting (F7) Practice Exam

Cash flows from investing activities focus on transactions that involve the acquisition and disposal of long-term assets. This includes cash outflows for purchasing fixed assets such as property, plant, and equipment, as well as investments in other businesses or entities. Additionally, cash inflows from selling these long-term assets also fall under this category.

Investing activities are crucial for understanding a company's growth strategy and capital investments, as they often reflect the company's future economic potential. By analyzing these cash flows, stakeholders can assess how much cash is being invested back into the business or generated through the sales of assets.

Other options provided do not accurately reflect the definition of investing activities. For instance, transactions involving bank deposits relate more to financing or operating activities, while product development costs may be categorized as operating expenses. Additionally, only considering cash received from sales ignores the broader scope of cash inflows and outflows associated with long-term asset management. Hence, option C provides the most comprehensive and accurate description of cash flows from investing activities.