When a fixed asset is bought as hire purchase, interest element is classified under and loan element is classified under __.

Operating activities, Financing activities

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Financing activities, Investing activities

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Investing activities, Operating activities

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None of the above

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Solution

The correct option is B Financing activities, Investing activities
The fixed asset is bought as hire purchase is the cost of obtaining financial resources or returns on investments. Hence, interest element is classified under financing activities and loan element is classified under investing activities.

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When a fixed asset is bought as hire purchase, interest element is classified under ______ and loan element is classified under ________.

When a fixed asset is bought as hire purchase, interest element is classified under and loan element is classified under __.