Which of the Following Would Be Considered a Financing Activity

question 129

Multiple Choice

Which of the following would be considered a financing activity that decreases cash?

• A) The company pays a long-term loan.
• B) The company sells common stock.
• C) The company purchases a building.
• D) The company pays its monthly utility bill.

---

Definitions:

Contribution Margin

The amount remaining from sales revenue after variable expenses are deducted, showing how much contributes to covering fixed costs and earning profit.

Break-even Point

The level of production or sales at which total revenues equal total expenses, resulting in no net profit or loss.

Fixed Expenses

Costs that do not fluctuate with the level of production or sales, such as rent, salaries, and insurance premiums.

Variable Expenses

Costs that change in proportion to the activity or volume of production in a business.