Concept explainers
Operating activities:
Operating activities refers to the type of activities the company performs, to generate net income. These are important activities of the business, it generates revenue, and expenses by way of manufacturing, distributing, marketing and selling of products or services.
Investment activities:
Investing activities are business activities that involve buying and disposing long-lived assets, which is used in operating activity. Buying and selling of land, buildings, machineries, and equipment for use in the business are the examples of investment activities.
Financing activities:
Financing activities refer to raising funds by way of issuing shares, bonds or to borrow money from bank to meet the financing need of the business, and paying dividends to stockholders, and interest to the lenders.
To classify: Each transaction as either on operating activity, investing activity or financing activity or if no cash is exchanged as a non-cash event.
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Financial Accounting 8th Edition
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- Question Directions: Establish the following T-Accounts and record the transactions directly into the T-accounts. Use the following account titles: CashMasunurin, CapitalAccounts ReceivableMasunurin, WithdrawalsSuppliesLaundry RevenuesPrepaid InsuranceSalaries ExpenseEquipmentRent ExpenseFurniture and FixturesUtility ExpenseAccounts PayableMiscellaneous Expense On January 1, 2017, Jaime Masunurin opened BLS Laundry Shop. Throughout the month of January, the following transactions were completed: 1. He deposited P400,000 in a bank account in the name of the business.2. He bought chairs and a table and paid them with P5,700 cash.3. He bought supplies on account from Morong Supply Inc. P3,250.4. He paid P5,750 for the monthly rental of the place.5. He bought washing machines and dryers from Bataan Equipment Corp. amounting to P115,000. He paid them with P35,000 in cash and the balance on the account.6. He earned P19,250 revenues on cash basis for the first half of the month.7. He…arrow_forwardThe journal entry to record a particular business transaction includes a debit to a liability account. This transaction is most likely also to include: a A cash receipt. b The purchase of an asset on account. c A cash payment. d A credit to Accounts Receivable.arrow_forwardDirections: Establish the following T-Accounts and record the transactions directly into the T-accounts. Use the following account titles: CashMasunurin, CapitalAccounts ReceivableMasunurin, WithdrawalsSuppliesLaundry RevenuesPrepaid InsuranceSalaries ExpenseEquipmentRent ExpenseFurniture and FixturesUtility ExpenseAccounts PayableMiscellaneous Expense On January 1, 2017, Jaime Masunurin opened BLS Laundry Shop. Throughout the month of January, the following transactions were completed: 1. He deposited P400,000 in a bank account in the name of the business.2. He bought chairs and a table and paid them with P5,700 cash.3. He bought supplies on account from Morong Supply Inc. P3,250.4. He paid P5,750 for the monthly rental of the place.5. He bought washing machines and dryers from Bataan Equipment Corp. amounting to P115,000. He paid them with P35,000 in cash and the balance on the account.6. He earned P19,250 revenues on cash basis for the first half of the month.7. He bought…arrow_forward
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