CFA Practice Question
All of the following would be considered financing activities except for ______.
A. current portion of long-term debt
B. notes payable to a bank AND dividends payable
C. loans receivable (e.g., from officers)
Explanation: Investing activities include lending funds and collecting the principal on these loans.
User Contributed Comments 8
| User | Comment |
|---|---|
| llgoms | financing = borrowing money. loans receivable = lending money |
| danlan | Lending funds, collecting principal are related to buying securities from other companies, those securities are considered as long term asset, so those are investing activities. Borrowing by equity and debt, paying principal of equity and debt, and paying equity dividend are financing activities. Collecting interest, dividend, and paying interest are considered operational. |
| dealsoutlook | good summary danlan |
| copus | thanks for the summary...that is very helpful (I have confess that Accounting is fast becoming my least favorite CFA module!) |
| Kathkun | Thank you danlan, that was useful =) |
| Insipidity | Excellent concise summary, danlan! |
| jjhigdon | In hindsight, I see why C is Investing, but I was tempted to chose B based on the fact that dividends paid can be classified as CFO under IFRS.... |
| ashish100 | Danlan is the man! or woman! |