(Appendix)A company receives cash from a bank loan.This activity is classified as

Question

Quizplus · Accepted Answer

Cash received from a bank loan is a financing activity because it represents a liability that the company has to repay to the bank, which is a source of financing for the company. This is shown in the statement of cash flows under cash flows from financing activities. Operating activities generally involve cash inflows and outflows related to the normal operations of the business, such as sales, expenses, and customer payments, while investing activities relate to the acquisition and sale of long-term assets, such as property, plant, and equipment. Borrowing is not a category of cash flows, but rather a financing activity that would be included within cash flows from financing activities.

(Appendix)A Company Receives Cash from a Bank Loan