You are seeking funding to expand your bakery business and increase the number of products you...
You are seeking funding to expand your bakery business and increase the number of products you can make each day. You have received funding (money) for your business from a bank. Next, you purchase an additional commercial oven. Consider the business activities cycle: which type of activity does each of these transactions represent? a. Financing Activities / Investing Activities b. Investing Activities / Operating Activities c. Financing Activities / Baking Activities d. Operating / Financing Activities
Homework Answers
Answer : a. financing activities/ investing activities
Financing activities result in the constitution of entities
capital like issue of equity , repayment of debt.
so raising a laon from bank is like raising debt , and debt
increases in the entity so it is a financing activity
Investing activities include the buying and disposal/sale of
long term assetss
theses long term assets derive long term benefit to the
company
so purchase of commercial oven which will provide future econmic
benefit to the company is investing activity
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