Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

7. Receivables and Investments

Introduction to Investments in Securities

Financial Accounting

7. Receivables and Investments

Introduction to Investments in Securities

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Multiple Choice

Which of the following is considered an investing activity on the statement of cash flows?

Purchasing shares of another company

Paying interest on a bank loan

Paying dividends to shareholders

Issuing common stock

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Verified step by step guidance

Understand the classification of activities in the statement of cash flows: Operating activities involve the primary revenue-generating activities of the business, financing activities involve transactions related to equity and debt, and investing activities involve the acquisition or disposal of long-term assets and investments.

Review the definition of investing activities: These include transactions related to the purchase or sale of property, plant, equipment, and investments in other companies.

Analyze each option: Purchasing shares of another company is considered an investing activity because it involves acquiring an investment. Paying interest on a bank loan is an operating activity, as it relates to the cost of financing operations. Paying dividends to shareholders is a financing activity, as it involves returning profits to equity holders. Issuing common stock is also a financing activity, as it involves raising capital.

Focus on the correct classification: Purchasing shares of another company aligns with the definition of investing activities, as it represents the acquisition of an investment.

Conclude that the correct answer is the activity that fits the definition of investing activities, which is 'Purchasing shares of another company.'