Which One of the Following Transactions Should Be Classified as a Financing

question 144

Multiple Choice

Which one of the following transactions should be classified as a financing activity on the statement of cash flows?

• A) Purchase of equipment.
• B) Purchase of the company's own stock.
• C) Sale of a long-term investment.
• D) Payment of interest to a lender.

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Definitions:

Concrete Reasoning

The ability to understand and reason about things that are directly experienced or seen, focusing on the literal and present aspects.

Intuitive Thought

The process of knowing or understanding something instinctively, without the need for conscious reasoning.

Concrete Operational

A stage in Piaget’s theory of cognitive development (roughly ages 7 to 11) during which children gain the ability to think logically about concrete events.

Analytic

Pertaining to or resulting from the process of breaking down complex information or problems into simpler parts for better understanding or resolution.