Borrowing money is an example of:Group of answer choicesan operating activity.a non-cash activity.an investing activity.a financing activity.
Question
Borrowing money is an example of:Group of answer choicesan operating activity.a non-cash activity.an investing activity.a financing activity.
Solution
Borrowing money is an example of a financing activity.
Financing activities in a business include transactions with owners and creditors and include both inflows and outflows of cash. The cash flows from financing activities section of the cash flow statement includes transactions that involve debt, equity, and dividends.
Borrowing money increases a company's debt and brings in cash, so it is considered a financing activity. Therefore, the correct answer is "a financing activity".
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 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.
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.
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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