A Company Borrows $125,000 from the Northern Bank and Receives

question 236

Multiple Choice

A company borrows $125,000 from the Northern Bank and receives the loan proceeds in cash. This represents a(n) :

• A) Operating activity.
• B) Financing activity.
• C) Investing activity.
• D) Revenue activity.
• E) Expense activity.

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Definitions:

Break-Even Point

The point at which total cost and total revenue are equal, resulting in no net loss or gain for the business.

Variable Costs

Expenses that vary in relation to the amount of products or services a company generates.

Fixed Costs

Expenses that do not change with the level of goods or services produced by a business, such as rent, salaries, or loan payments.

Units

In the context of inventory or production, refers to the individual items or components that can be counted or measured.