Which of the Following Activities Is an Operating Activity

question 17

Multiple Choice

Which of the following activities is an operating activity?

• A) Collections of accounts receivable.
• B) Investing in equity securities of other companies.
• C) Payment of dividends.
• D) Issuing common stock

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Definitions:

Effective Annual Rate

This is the interest rate on an investment or loan that accounts for the effects of compounding over a given period, providing a more accurate picture of financial returns or costs.

Monthly Compounding

The process of calculating interest earnings on the principal and previously earned interest every month.

Nominal Annual Interest Rate

The stated interest rate of a bond or loan, not adjusted for inflation, which indicates the periodic interest payment.

Payment Plans

Agreements outlining how a borrower will pay back a loan or an installment purchase over a specified time period.