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Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773

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BuyFindarrow_forward

Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773
Textbook Problem
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Which of the following is a financing activity?

  1. a. Increase in inventories
  2. b. Purchase of land
  3. c. Increase in accounts receivable
  4. d. Issuance of a mortgage
  5. e. All of these.

To determine

Identify the financing activity.

Explanation

Cash Flows from Financing Activities:

This category of a cash flow statement includes those activities which help a company to raise cash from creditors and owners. Financing activities basically show those activities that are required to fund a company.

d.

The issuance of mortgage is a financing activity. Any activity done to raise or provide capital to the owners or creditors is a financing activity. Issuance of mortgage is also done to raise cash. Therefore, d is the correct option.

a.

The increase in inventories is an operating activity...

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