Borrowing money is an example of:Group of answer choicesa non-cash activity.a financing activity.an investing activity.an operating activity.
Question
Borrowing money is an example of:Group of answer choicesa non-cash activity.a financing activity.an investing activity.an operating activity.
Solution
Borrowing money is an example of a financing activity.
Here's why:
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Non-cash activities are transactions that do not involve any cash flows, such as depreciation or amortization. Borrowing money involves cash inflow, so it's not a non-cash activity.
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Investing activities are related to the acquisition and disposal of long-term assets, such as property, plant, and equipment, or other investments. Borrowing money doesn't fall into this category.
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Operating activities are the primary revenue-producing activities of a business, such as selling goods, providing services, and other day-to-day business operations. Borrowing money is not an operating activity.
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Financing activities are transactions involving changes in equity and borrowings, which are used to fund the company's operations and expansions. Borrowing money falls into this category because it's a way for the company to generate funds for its operations or expansions.
Similar Questions
Borrowing money is an example of a/an:Group of answer choicesoperating activity.financing activity.marketing activity.investing activity.
Which of the following is not an example of noncash financing and investing?Multiple ChoicePurchase of equipment by issuing a note payable.Retirement of debt by issuing equity stock.Conversion of preferred stock to common stock.Purchase of a building by issuing equity stock.Purchase of inventory using cash.
Which of the following would not be classified as a financing activity in a statement of cash flows?Group of answer choicesDividends received.Repayment of borrowings.Proceeds from a share issue.Proceeds from borrowings.
Interest:A.is the cost of borrowing money.B.is the additional payment made by borrowers to lenders to convince them to delay their spending.C.depends on the supply and demand for loanable funds.D.is income for the households who loan money through financial intermediaries to firms for capital goods.E.All of these.
Which of the following is an example of a noncash activity?Multiple ChoicePurchase of long-term assets by issuing debtReacquisition of a company's own stockSale of an intangible assetPurchase of investments with cash
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