What is not an investing activity?
Issuance of common stock. The issuance of common stock is a financing activity, not an investing activity.
Answer and Explanation:
The correct option is C. Borrowing money.
Option A: Selling goods and services is the correct option
Sales of goods and serviced are the normal operating activity of the business and recorded under the operating activities.
In accounting, investing activities refers to the purchase and sale of long-term assets and other business investments within a specific reporting period. Investing activities are, in fact, one of the main categories of cash activities that your business would be reporting on its cash flow statement.
Sale of investment is not a financing activity.
The correct option is B. Cash payments to acquire new equipment. Investing activity is a section of the cash flow statement concerning the cash inflows and outflows for long-term assets. Equipment in the balance sheet is classified as a long-term asset hence this is part of the investing activity.
If a company borrows money, this is a financing activity. There are some inflows from financing activities including borrowing money or selling common stock. Outflows from financing activities include paying the principal part of debt (a loan payment), buying back your own stock or paying a dividend to investors.
Investing activities are one of the main categories of net cash activities that businesses report on the cash flow statement. Investing activities in accounting refers to the purchase and sale of long-term assets and other business investments, within a specific reporting period.
Investing activities include making and collecting loans, purchasing and selling debt or equity instruments of other reporting entities, and acquiring and disposing of property, plant, and equipment and other productive assets used in the production of goods or services.
The purchase or sale of a fixed asset like property, plant, or equipment would be an investing activity. Also, proceeds from the sale of a division or cash out as a result of a merger or acquisition would fall under investing activities.
What is not considered a cash flow activity?
Cash flow from operating activities does not include long-term capital expenditures or investment revenue and expense. CFO focuses only on the core business, and is also known as operating cash flow (OCF) or net cash from operating activities.
Answer and Explanation:
The correct option is (a) Purchase of inventory. Purchase of inventory is the operational activity of a business and hence any cash flows associated with the purchase of inventory would appear under cash flows from operational activities and not in the investing section.
Investing activities include the purchase or sale of long-lived assets used in operating the business, or the purchase or sale of investment securities. What are financing activities? The primary types of financing activities are borrowing money, issuing shares of stock, and paying dividends.
The purchase of another company's stock is an example of an investing activity. Cash flows from financing activities include the payment of interest on a note payable.
Investing activities refer to earnings or expenditures on long-term assets, such as equipment and facilities, while financing activities are the cash flows between a company and its owners and creditors from activities such as issuing bonds, retiring bonds, selling stock or buying back stock.
Answer and Explanation: The correct answer is A. Issuance of common stock. The issuance of common stock is a financing activity, not an investing activity.
Loans against shares cannot be considered as finance.
Financing activities are transactions between a business and its lenders and owners to acquire or return resources. In other words, financing activities fund the company, repay lenders, and provide owners with a return on investment. Financing activities include: Issuing and repurchasing equity.
There isn't a singular agreed-upon formula, but the following formula is generally accepted: Cash flow from investing activities = CapEx/purchase of non-current assets + marketable securities + business acquisitions - divestitures.
Cash flows from investing activities include making and collecting loans (except for program loans) and the acquisition and disposition of debt or equity instruments.
Which is not one of the three basic types of cash flow activities?
The correct answer is c.
They include operating, investing, and financing activities. Income activities, on the other hand, are not included in the statement of cash flows but in the income statement, also known as the statement of profit or loss.
Yes, borrowing money on a short-term or long-term basis from the bank is considered a financing activity. However, the debt must be used to acquire capital or funding for a company and not for the business owner's personal use.
The correct option is (a) Purchase of equipment. Investing activities are related to procurement and sale of fixed assets and long-term investment. Hence the purchase of equipment is an investing activity. Payment of interest, issuing common stock, and issuing long-term debt are all financing activites.
Cash payments for dividends to shareholders. Neither of these are operating activities. Cash payments for dividends to shareholders are classified under financing activities.
d. Payment of dividends would not be classified as an operating activity. An Operating activity is any activity in an organization that helps to generate revenue. Apart from payment of dividends, all the other given activities can be classified as operating activities.
