Summary of Business Activities

Question 1

What are the 3 types of business activities that companies engage in?

Answer 1

1. financing
2. investing
3. operating

Question 2

What are the cash inflows in financing activities?

Answer 2

• Issuing shares
• Taking out a loan

Question 3

What are the cash outflows in financing activities?

Answer 3

• Paying dividends
• Repurchasing shares
• Repaying loans

Question 4

What are the cash inflows in investing activities?

Answer 4

• Proceeds from selling long-lived assets
• Proceeds from selling shares from other companies

Question 5

What are the cash outflows in investing activities?

Answer 5

• Buying long-lived assets
• Proceeds from selling shares of other companies

Question 6

What are the cash inflows in operating activities?

Answer 6

• Revenues
• Collection of receivables
• Sale of services or goods

Question 7

What are the cash outflows in operating activities?

Answer 7

• Expenses
• Payment of payables
• Purchase of inventory and supplies

Question 8

What are financing activities?

Answer 8

Involve either equity or debt financing.

Question 9

What are activities related to equity financing?

Answer 9

Issuing shares to shareholders, paying dividends to shareholders, or repurchasing shares

Question 10

What are activities related to debt financing?

Answer 10

Borrowing cash from creditors by issuing debt, or conversely, using cash to repay debt.

Question 11

What are investing activities?

Answer 11

Include purchasing and disposing of long-lived assets such as property, plant, and equipment and long-term investments

Question 12

What are operating activities?

Answer 12

Result from day-to-day operations and include revenues and expenses and changes in related accounts, including receivables, supplies, inventory, and payables accounts.