Question

All businesses are involved in three types of activities—financing, investing, and operating. Listed below are the names and descriptions of companies in several different industries.Abitibi Consolidated Inc.—manufacturer and marketer of newsprintCal State–Northridge Stdt Union—university student unionOracle Corporation—computer software developer and retailerSportsco Investments—owner of the Vancouver Canucks hockey clubGrant Thornton LLP—professional accounting and business advisory firmSouthwest Airlines—discount airlineFor each of the above companies, provide examples of a financing activity, an investing activity, and an operating activity that the company likely engages in. Which of the activities that you identified in part (a) are common to most businesses? Which activities are not?

Answer 1

Abitibi Consolidated Inc.—manufacturer and marketer of newsprint

operating: payment of utilities

investing: purchase of factory equipment

financing: issue of shares

Cal State–Northridge Stdt Union—university student union

operating: wages to the employees

investing: purchase of a building

financing: signing of a promissory note

Oracle Corporation—computer software developer and retailer

operating: delevopment of software

investing: purchase of computer equipmnet

financing: dividends declared

Sportsco Investments—owner of the Vancouver Canucks hockey club

operating: ticket sales

investing: improvement on the stadium

financing: bank loan

Grant Thornton LLP—professional accounting and business advisory firm

operating: accounting services

investing: purchase of bonds

financing: bonds

Southwest Airlines—discount airline

operating: insurance

investing: sale of a plain

financing: issue of bonds

Most business have in common

the payment of wages, taxes, rent and insurance.

Also the purchase or sale of equipment

And the issue of debt in form of bonds or a promissory note.

Step-by-step explanation:

operating: From the daily business main activity.

investing: Mostly, from long term assets and investment

financing: Mostly, from equity and liaiblities transaction which involves receive funds in exchange of interest

Answer 2

1. Abitibi Consolidated Inc.—manufacturer and marketer of newsprint

• operating activity: as manufacturer and marketer of newsprint, their operations could include payment for stationaries.

• investing activity: purchase of printing equipment.
• financing activity: issuance of shares.

2. Cal State–Northridge Stdt Union—university student union

• operating activity: cost of holding meetings with union members.
• investing activity: purchase of a vehicle.
• financing activity: this could opening up membership registration.

3. Oracle Corporation—computer software developer and retailer

• operating activity: software research and devlopment
• investing activity: purchase of computer equipment
• financing: sales of software licenses.

4. Sportsco Investments— the owner of the Vancouver Canucks hockey club.

• operating activity: property maintenance cost
• investing activity: marketing-related cost
• financing activity: bank loan

5. Grant Thornton LLP—professional accounting and business advisory firm.

• operating activity: could including accounting services
• investing activity: recruitment of legal personnel
• financing: sales of bonds

6. Southwest Airlines—discount airline

• operating activity: marketing cost
• investing activity: purchase of planes
• financing activity: loans.