Question

Classify each of the following items as an operating,investing,or financing activity.

1. Dividends paid.
2. Repayment of notes payable.
3. Payment for inventory.
4. Purchase of equipment.
5. Interest paid.

Answer 1

Operating Activities

3. Payment for inventory.

5. Interest paid.

Investing Activities

4. Purchase of equipment.

Financing Activities

1. Dividends paid.

2. Repayment of notes payable.

Step-by-step explanation:

Operating Activities involves activities in the trading operations of the business.

Investing Activities involves activities in acquisition and sale of Company assets or Investments

Financing Activities involves activities in the sourcing and repayment of sources of finance to holders of the instruments.