When a loan is repaid to the bank it leads to an outflow of cash from a financing activity.

Question

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When a loan is repaid, it means the borrower is paying back the borrowed principal amount plus interest to the lender, which is typically a bank. This results in an outflow of cash from the borrower's financing activities, as they are reducing their liabilities to the bank. On the other hand, for the bank, it leads to an inflow of cash from financing activities, as they are receiving the repayment of the loan.

When a Loan Is Repaid to the Bank It Leads