A fitness center repays $10,000 it borrowed from the bank to purchase an exercise machine.This is an example of a(n):

Question

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Repaying a loan is a financing activity, as it involves the repayment of funds borrowed to finance the purchase of assets such as exercise machines. Option A (investing activity) would be more appropriate if the fitness center had purchased additional equipment or made capital improvements. Operating activities (option C) refer to the day-to-day functions of the business, such as sales and expenses. Planning activities (option D) involve long-term strategizing and decision-making, which may or may not involve actual financial transactions. Therefore, the best choice for the given scenario is option B (financing activity).

A Fitness Center Repays $10,000 It Borrowed from the Bank