Question

In: Accounting

Which of the following would be classified as a financing activity on the statement of cash...

Which of the following would be classified as a financing activity on the statement of cash flows?

A. Paying cash dividends.

B. Paying interest on a long-term note.

C. Issuing long-term notes for plant assets.

D. Purchasing machinery with cash

Solutions

Expert Solution

Correct Answer : A

Paying Cash Dividends to Shareholders would be a Financing Activity.

Just to brush up :

Financing activities include repayment of short-term loans and/or long-term loans, the retirement of bonds payable, the purchase of a company's own stock, the declaration and payment of dividends, and other decreases in long-term liabilities and stockholders' equity.

Then why are others wrong :

Lets understand,

B) Paying interest on a long term note would go to the profit & loss account / income Statement as an Expense and would be treated as an OPERATING ACTIVITY.

C) Issuing Long Term Notes for plants assets : My Friends there is No Cash Flow here its a non cash transaction (to understand it may also be called as barter), But remember, had only Notes been issued for cash then we would treat it as a Financing Activity or for that matter only plant would have been purchased for cash we would put it in Investing Activity.

D) Machinery for Cash is a plain vanilla Investing Activity. No Confusion

Hope that helps!



Related Solutions

In a statement of cash flows, which of the following would be classified as an investing...
In a statement of cash flows, which of the following would be classified as an investing activity? Multiple Choice The sale of the company's own common stock for cash. The sale of equipment. Interest paid to a lender. The issuance of bonds payable.
Which item would be classified as a source of cash on a company's statement of cash...
Which item would be classified as a source of cash on a company's statement of cash flows? Decrease in accounts payable Increase in accounts receivable Depreciation expense Increase in inventory Which of the following Accounting Standards Codification (ASC) Topics covers US accounting for translating a company's foreign financial statements into their home currency? Topic 320 Topic 820 Topic 830 Topic 815 Lenders, creditors and investors usually pay additional attention to which of the following financial statements? Statement of cash flows...
Multiple Choice Question 85 Which of the following is classified as a financing activity? Payment of...
Multiple Choice Question 85 Which of the following is classified as a financing activity? Payment of dividends Receipt of dividend income Receipt of interest on loan receivable Investment in another company’s stock Multiple Choice Question 87 When a company repurchases its own stock, which of the following is the correct reporting on the statement of cash flows? A source of cash in the investing section A use of cash in the investing section A source of cash in the financing...
Which of the following is classified in an income statement as a nonoperating activity? Cost of...
Which of the following is classified in an income statement as a nonoperating activity? Cost of goods sold Advertising expense Interest expense Freight-out
Which of the following items would be classified as a source of cash on a company's...
Which of the following items would be classified as a source of cash on a company's statement of cash flows? 1. increase in accounts receivable 2. Increase in accounts payable 3. Increase in Inventory 4.depreciation expense A.3 ONLY B.1 and 3 only C.2 AND 4 ONLY D 1,2,4
Which of the following would not represent a financing activity? Paying dividends to stockholders. An investment...
Which of the following would not represent a financing activity? Paying dividends to stockholders. An investment of capital by the owners. Borrowing money from a bank to purchase new equipment. Buying supplies. The obligations and debts of a business are referred to as: equities. assets. dividends. liabilities. Which of the following financial statements shows how net income (loss) and dividends impacted a stockholders' equity account? Statement of Retained Earnings Balance Sheet Statement of Cash Flows Income Statement Golden Enterprises started...
1.Which of the following would be classified as a product-level activity? A. Setting up a machine...
1.Which of the following would be classified as a product-level activity? A. Setting up a machine for a batch of a standard product. B. Operating a cafeteria for employees. C. Running the Human Resource department. D. Advertising a product.   2.The plant manager's work is an example of a: A.Unit-level activity. B.Batch-level activity. C.Product-level activity. D. Facility-level activity.                                                                                                                                                            3.In activity-based costing, the activity rate for an activity cost pool is computed by dividing the total overhead cost in the activity...
which of the following activities would MOST LIKELY be classified as a non-value added activity in...
which of the following activities would MOST LIKELY be classified as a non-value added activity in a factory that manufactures microwave ovens? a. inserting glass shelves into the frames b. storing finished goods c. installing timing devices d. conducting tests in line with ISO certification requirements
Which of the following would be reported as an investing activity in a company’s statement of...
Which of the following would be reported as an investing activity in a company’s statement of cash flows? 1) Collection of proceeds from a note payable 2) Collection of a note receivable from a related party 3) Collection of an overdue account receivable from a customer 4) Collection of a tax refund from the government
Which of the following is a source of cash that would appear on the statement of...
Which of the following is a source of cash that would appear on the statement of cash flows? decrease in notes payable increase in gross fixed assets increase in accrued expenses
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT