(3) Issues and payments of debt (4) Purchases, sales, and exchanges of assets (5) Operating transactions b. Briefly explain why the transactions are considered increasingly operating (or decreasingly financing) as the categories move from (1)10 (5).
Solution
Transactions are considered increasingly operating and decreasingly financing because the transactions such as issue and payments of debts are directly relating to raising of finance the main motive of such transaction is either sources of raising fund or application of funds . Transactions such as purchase sale and exchnage are investing activities the motive of these activities is to invest in assets to generate operating income and operating transactions are directly related to the business of the company and deals with generating the operating income of the company
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(3) Issues and payments of debt (4) Purchases- sales- and exchanges of.docx
1. (3) Issues and payments of debt (4) Purchases, sales, and exchanges of assets (5) Operating
transactions b. Briefly explain why the transactions are considered increasingly operating (or
decreasingly financing) as the categories move from (1)10 (5).
Solution
Transactions are considered increasingly operating and decreasingly financing because the
transactions such as issue and payments of debts are directly relating to raising of finance the
main motive of such transaction is either sources of raising fund or application of funds .
Transactions such as purchase sale and exchnage are investing activities the motive of these
activities is to invest in assets to generate operating income and operating transactions are
directly related to the business of the company and deals with generating the operating income of
the company
