[janemorales]

Classify each of the following business activities as an operating, investing, or financing activity.

Acquiring inventory for resale - OA
Buying and selling stocks & bonds of other companies - IA
Selling shares of stocks to investors for cash - FA
Selling products or services - IA
Buying property, plant, or equipment - IA
Acquiring and paying for other operating items - OA
Selling property, plant, or equipment - OA
Borrowing cash from creditors - FA

Did I classify these correctly?

[morgaine300]

Just as a note, these really should be under Homework Help. But if you must put them under business, they're accounting, not finance.

Selling products or services is THE MAIN operating activity you have. What are you selling? That inventory you purchased on the first line, and it's the same activity. Selling is the main revenue -- that is exactly what "operating" means.

Property, plant & equipment are not part of your operations. They are what the company has invested in, in order to do the operations. But they aren't an operating activity.

We need some more definitions.

Operations is what the company does on a day-to-day basis. In order to do operations, they have to have resources. i.e. they invest in assets in order to do business. And in order to invest in resources, they must have money, i.e. financing. You want to make a product (operations), so you need to buy a machine and a truck (investing), and you need to finance that so you borrow some of it and sell stock for some of it (financing).

Or, the easy way to memorize it: all non-current assets are investing. All non-current liabilities and all equity are financing. And don't let the direction of the money throw you off. For example, paying a loan back may not be actually getting the financing, but it's a financing activity.