Simmons Hospital, a nonprofit hospital affiliated with a religious group, received the following cash contributions from donors during the year ended December 31, year 1:
• For capital acquisitions $500,000
• For permanent endowments 250,000
The cash received for capital acquisitions was used to acquire assets in year 2, while the cash received for the permanent endowment was used to acquire investments during year 1. What effect did these cash contributions have on the amounts reported for cash flows from investing activities and cash flows from financing activities on the statement of cash flows for the year ended December 31, year 1?
Cash flows from investing activities Cash flows from financing activities
Decrease $250,000 Increase $500,000
Decrease $750,000 Increase $750,000
Decrease $250,000 Increase $250,000
Decrease $250,000 Increase $500,000
Answer is B.. I get the explanation, but still weird to me.
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