Answer to Question #244798 in Accounting for samantha

Question

I. Directions: Determine whether each of the following activities are operating, financing or

investing in nature.

1.Payments for purchases of inventories

2.Payment for current taxes

3.Sale of land owned by the entity with double revaluation surplus

4.Proceeds from long-term borrowings

5. Revenue from services

6. Payments for machineries bought from supplier

7. Repayment of long-term loans payable

8. Purchase of long-term investment from other company

9. Proceeds from sale of franchise

10. Payment of income tax expenses

Answer 1

Solution:

The following activities have been classified as below:

1.Payments for purchases of inventories – Operating activity.

2.Payment for current taxes – Operating activity.

3.Sale of land owned by the entity with double revaluation surplus – Investing activity.

 

4.Proceeds from long-term borrowings – Financing activity.

5. Revenue from services – Operating activity.

6. Payments for machineries bought from supplier – Investing activity.

7. Repayment of long-term loans payable – Financing activity.

8. Purchase of long-term investment from other company – Investing activity.

9. Proceeds from sale of franchise – Investing activity.

10. Payment of income tax expenses – Operating activity.