Match each transaction a through e to one of the following a

Match each transaction a through e to one of the following activities of an organization: financing activity Exercise 1-21 (F), investing activity (D, or operating activity (O). Identifying business activities a. An owner contributes cash to the business b. An organization borrows money from a bank. c. An organization advertises a new product d. An organization sells some of its land. e. An organization purchases equipment. C5

Solution

Solution: F a. An owner contributes cash to the business. Notes: Owners can contributes to business cash in form of capital or common stock or which comes under financing activities. F b. The organization borrows money from a bank Notes: Borrowing also comes under financing activities as , it increase cash flow increase in loan of the firm. O C. An organization advertises a new product. Notes: Is operating activities as its payment will be operating expenses and its effect will be on operating revenue of the firm. I D. An organization sells some of its land Notes: Is investing activities as it increases the cash from decrease in capital assets of the company in which cash earlier invested. I E . An organization purchases equipment. Notes: Equipment is capital assets, and money is used to purchase is as investment for the firm. Please feel free to ask if anything about above solution in comment section of the question.