Durning Company Loaned $1,000,000 at 8 Percent Interest to Silva

question 96

Multiple Choice

Durning Company loaned $1,000,000 at 8 percent interest to Silva Company. The interest revenue would be classified as a(n)

• A) Operating activity
• B) Investing activity
• C) Financing activity
• D) Noncash transaction

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Definitions:

Materials Cost

The expense associated with the raw materials and supplies used in the production of goods or services.

Labor

The work performed by individuals that contributes to the production of goods or services in an economy, often categorized as manual or skilled tasks.

Monthly Expenses

Regular costs incurred every month, such as rent, utilities, and groceries, necessary for maintaining a standard of living.

Contribution Margin

The amount by which a product's sales revenue exceeds its variable costs, used to cover fixed costs and contribute to profits.