A corporation raises $500,000 in long-term debt to acquire additional plant capacity. This is considered as ________.

Question

Quizplus · Accepted Answer

Raising $500,000 in long-term debt is considered a financing cash flow because it relates to the inflows and outflows of cash that result from activities used to fund the company. Using the funds to acquire additional plant capacity is considered an investment cash flow because it involves the purchase of long-term assets that will be used in the business.

A Corporation Raises $500,000 in Long-Term Debt to Acquire Additional