A company's transactions with its creditors to borrow money and/or to repay the principal amounts of both short- and long-term debt are reported as cash flows from:
A) Operating activities.
B) Investing activities.
C) Financing activities.
D) Direct activities.
E) Indirect activities.

Question

Quizplus · Accepted Answer

Transactions with creditors to borrow money or repay principal amounts of both short- and long-term debt are reported as cash flows from financing activities. This is because these transactions involve the inflow and outflow of cash related to the company's financing arrangements, which fall under the category of financing activities.

A Company's Transactions with Its Creditors to Borrow Money And/or