Accounting problem 3?

Question

activities which lead to an increase or decrease in long term debt of a corporation are referred to as:

a.operating activities

b.financing activities

c.investing activities

d.debt activities.

Answer 1

josh is correct.  You are talking about statement of cash flows, financing activities.  An increase in debt would be a cash inflow - a source of financing.

Answer 2

Financing activities.  Look at a companies 10-k and you will see this on the cashflow statement.  Operating acitivties are how cashflows through the business by selling its products.  Investing activities show what the company is investing in (ie. fixed assets).  Which is usually a cash outflow.  The cashflow statement as a whole takes the  accural method of accounting and transforms it into a cash basis.