Repayment of loans is classified as a/an
1.Financing activity
2 .Investing activity
3 .Both Financing activity and Investing activity
4 .Operating activity
Answers
Repayment of the loan is classified as a Financial Activity.
Financial activities in any business organisation involve any kind of changes that are made to shareholder's equity, long-term liabilities and short term borrowings for a considerable period of time. The financial activities are recorded in the statement of cash flows.
A loan is divided into principal amount and interest. The principal amount will come under financial activity. On the other hand, the interest amount paid can either be a part of financial activity or operating activity.
Answer:
Repayment of the loan is classified as a Financial Activity.
Explanation:
Financial activities in any business organisation involve any kind of changes that are made to shareholder's equity, long-term liabilities and short term borrowings for a considerable period of time. The financial activities are recorded in the statement of cash flows.
A loan is divided into principal amount and interest. The principal amount will come under financial activity. On the other hand, the interest amount paid can either be a part of financial activity or operating activity.