Question

Which part/word/phrase in the passage refers to a business’s financing activity seen in a cash flow statement?
Nathan works as an accountant in a footwear manufacturing company. He is currently preparing the cash flow statement for his employer. During the given accounting period, the company purchased raw materials worth $25,000. It also bought new equipment worth $75,000 to increase its production output. Further, it borrowed a long-term bank loan of $100,000 to facilitate further expansion. Finally, the company spent $50,000 on advertising its latest brand of footwear in the market.

a. the company purchased raw materials worth $25,000
b. bought new equipment worth $75,000 to increase its production output.
c.it borrowed a long-term bank loan of $100,000 to facilitate further expansion.
d.the company spent $50,000 on advertising its latest brand of footwear

Answer 1

Answer

C. It borrowed a long-term bank loan of $100000 to facilitate further expansion

Explanation

Financial activities in a cash flow statement will concentrate on the manner the company raises capital and pays it back to the investors through capital markets. The activities can include selling of more stock, adding loans, changing loans or paying cash dividends.