Question

Lending money and collecting the loans are A. operating activities. B. investing activities. C. Non-cash investing and financing activities. D. financing activities.

Answer 1

Answer:

B. investing activities.

Explanation:

Cash flow transactions are categorized into three categories,

• Operating
• Investing
• Financing

Under Investing activities a company invests the money or cash in some sort of securities, in our case case loan, while investing it gives the money to some third person, then it gets return like interest or dividend on such amount.

Here, the company has lend some money in the form of loan and then it collects the loan, therefore it is investing activity.

Exceptionally if a company is a banking or NBFC companies then it lends money in normal course, and then collects them back in that case it is operating activity.

In general it is

B. investing activities.