Question : When a fixed asset is bought as hire purchase, interest element is classified under ______ and loan element is classified under________.
Option 1: Operating activities, financing activities
Option 2: Financing activities, investing activities
Option 3: Investing activities, operating activities
Option 4: None of the above
Correct Answer: Financing activities, investing activities
Solution : The cost of receiving financial resources or returns on investments is the cost of the fixed asset, which is purchased as a hire purchase. Therefore, the loan component is included under investment activities whereas the interest component is categorised under financing activities.
Hence the Correct answer is option 2.
Question : Interest received on Calls-in-arrear by a Company is considered as------------------.
Option 1: Operating activities
Option 2: Investing Activities
Option 3: Financing Activities
Question : Royal Ltd is a financing company. Under which activity will the amount of interest paid on a loan settled in the current year be shown?
Option 1: Investing Activities
Option 2: Financing Activities
Option 3: Both investing and Financing Activities
Option 4: Operating Activities
Question : Interest paid by an investment company will come under which kind of activity while preparing. Cash-flow statement?
Option 1: Operating Activities
Regular exam updates, QnA, Predictors, College Applications & E-books now on your Mobile