Typical Financing Activities Do NOT Include the Following

question 16

Multiple Choice

Typical financing activities do NOT include the following:

• A) Proceeds from issuance of short- and long-term borrowings.
• B) Principal payments on short- and long-term borrowings.
• C) Purchase of shares for retirement.
• D) Purchase of short- or long-term investments for cash.

---

Definitions:

Financial Leases

Long-term leases that transfer substantially all the risks and rewards of ownership of the asset to the lessee, similar to finance purchases.

Financial Lease

A type of lease in which the lessee has use of the asset for most of its useful life and the lease payments cover the full cost of the asset, effectively transferring the risks and rewards of ownership.

Financial Lease

A type of lease in which the lessee has use of the asset for most of its useful life, and the lease payments are designed to cover the lessor's purchase costs and provide a profit.

Lessor

The group that provides a property or asset for lease to another group, identified as the lessee.