Answer to Question #243997 in Accounting for Another you

Question

A. Classify the transactions below if it is Operating, Financing, or Investing.

1. Cash payment to suppliers

2. Cash sales

3. Owner's withdrawal of cash from business' fund

4. Payment from cash customers

5. Payment to employees

6. Collection on long term claims from the customers

7. Proceeds from a bank loan

8. Settlement of rental fees of the leased space

9. Cash contribution of owner

10. Cash received from sale of furniture (company's main line of business is not related to furniture)

Answer 1

Solution:

A.).  Classify the transactions below if it is Operating, Financing, or Investing.

The transactions have been classified as follows:

1. Cash payment to suppliers = Operating.

2. Cash sales = Operating.

3. Owner's withdrawal of cash from business' fund = Financing.

4. Payment from cash customers = Operating.

5. Payment to employees = Operating.

6. Collection on long term claims from the customers = Operating.

7. Proceeds from a bank loan = Financing.

8. Settlement of rental fees of the leased space = Operating.

9. Cash contribution of owner = Financing.

10. Cash received from sale of furniture (company's main line of business is not related to furniture) = Investing.