current attempt in progress\nconsider the following business activities that occur at a colorado ski area…
current attempt in progress\nconsider the following business activities that occur at a colorado ski area. classify each of the items by type of business activity: operating, investing, or financing.\n\ntype of activity\n1. cash receipts from customers paying for daily ski passes.\n2. payments made to purchase additional snow - making equipment.\n3. payments made to repair the snow - grooming machines.\n4. receipt of funds from the bank to finance the purchase of additional snow - making equipment.\n5. issue of shares to raise funds for a planned expansion.\n6. repayment of a portion of the bank loan (see item 4).\n7. payment of salaries to the ski - lift operators.\n8. payment of dividend to shareholders.
Answer
Brief Explanations:
- Cash receipts from customers are part of normal business - related income generation, so it's an operating activity.
- Purchase of equipment is an investment in long - term assets for the business, thus an investing activity.
- Repairs are part of day - to - day operations to keep assets in working condition, so it's an operating activity.
- Receiving funds from the bank for financing an asset purchase is a financing activity as it involves borrowing money.
- Issuing shares to raise funds is a financing activity as it involves equity financing.
- Repayment of a bank loan is a financing activity as it relates to the settlement of debt.
- Payment of salaries to employees is part of normal business operations, so it's an operating activity.
- Payment of dividends to shareholders is a financing activity as it relates to the distribution of profits to equity investors.
Answer:
- Operating
- Investing
- Operating
- Financing
- Financing
- Financing
- Operating
- Financing