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
Answer (1)
13th Jan, 2024
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.
Comments (0)
Trending Articles/News
