How Is Cash Received from Using a Line of Credit

question 5

Multiple Choice

How is cash received from using a line of credit reported on the statement of cash flows?

• A)As an investing activity
• B)As an operating activity
• C)As a financing activity
• D)As a non-cash activity

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Definitions:

Present Value

The amount needed to invest today to reach a stated future goal, given a certain rate of return.

Withdrawals

Amounts of money taken out of an account, which can reduce the balance in banking or investment contexts.

Compounded Semiannually

Refers to the process of applying interest to a principal sum twice a year, leading to interest being added to the total amount on which future interest payments are calculated.

Present Value

The current worth of a future sum of money or stream of cash flows, given a specified rate of return.