Which of the Following Would Be Classified as a Financing

question 18

Multiple Choice

Which of the following would be classified as a financing activity on the statement of cash flows?

• A) Paying suppliers for inventory purchases.
• B) Interest paid to lenders.
• C) Lending money to another company.
• D) Repurchasing capital stock from owners.

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Definitions:

Carrying Amount

The book value of assets or liabilities as recorded in the financial statements, after accounting for depreciation, amortization, or impairment.

Residual Value

The estimated remaining value of an asset at the end of its useful life.

Units-of-Production Method

A depreciation method that allocates expense based on the actual usage or output of the asset, reflecting its wear and tear more accurately.

Depreciation Expense

A financial approach to distribute the expense of a physical asset throughout its operational lifespan.