Question

Classify the transaction as either an operating activity, an investing activity, a financing activity, or a noncash activity:

1. Common stock is sold for cash
2. Bonds payable are issued for cash at a discount
3. Interest on a short-term note receivable is collected
4. Merchandise is sold to customers for cash
5. Cash paid to purchase inventory

Answer 1

1. financing activity

2. financing activity

3. investing activity

4. operating activity

5. operating activity

Step-by-step explanation:

Operating Activities includes Firms activities in sale and purchase of Inventory.

Investing Activities shows cash resulting from acquiring and sale of assets as well as receipt of interest on the investments.

Financing Activities shows cash resulting from raising capital or debt and the repayment of debt.