When a fixed asset is bought as hire purchase, interest element is classified under ___.

Operating activities

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Investing activities

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Financing activities

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None of these

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Solution

The correct option is C
Financing activities

When a fixed asset is bought as hire purchase, interest element is classified under financing activities.

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Similar questions

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

When the instalment paid in respect of a fixed asset acquired on deferred payment basis includes both interest and loan, the interest element is classified under financing activities & and the loan element is classified under ___ activities.

Q. Classify the Following Activities into cash Flows under (A) Operating (B) Investing (C) Financing:
(i) Cash Sales of Goods.
(ii) Income Tax paid.
(iii) Dividend Paid.
(iv) Purchase of Fixed Assets.
(v) Redemption of Debentures.
(vi) Royalty Received.
(vii) Cash paid to the Suppliers
(viii) Rental Income.

When the instalment paid in respect of a fixed asset acquired on deferred payment basis includes both interest and loan, the interest element is classified under _________ activities.

Purchase of fixed assets is ___ while calculating cash flow from investing activities.

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When a fixed asset is bought as hire purchase, interest element is classified under ___.

The correct option is C Financing activities When a fixed asset is bought as hire purchase, interest element is classified under financing activities.

The correct option is C
Financing activities

When a fixed asset is bought as hire purchase, interest element is classified under financing activities.