Classifications of Business Operations
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Questions and Answers

What are the three types of business operations that a business transaction can be classified into?

  • Financing, investing, operating (correct)
  • Selling, purchasing, marketing
  • Profit, loss, revenue
  • Production, management, distribution
  • What do 'financing activities' in a business involve?

  • Investing in assets for business operations
  • Paying salaries to employees
  • Raising funds for the company to operate or expand (correct)
  • Selling products to customers
  • In the context of business operations, what does 'equity' refer to?

  • Investing in assets
  • Debts of the company
  • Ownership in the company (correct)
  • Operating expenses
  • Who are the purchasers of stock in a corporation called?

    <p>Equity investors</p> Signup and view all the answers

    Which type of activity involves transactions where a business is investing in assets?

    <p>Investing activities</p> Signup and view all the answers

    What are examples of operating transactions mentioned in the text?

    <p>Payment of rent, salaries, and insurance expenses</p> Signup and view all the answers

    What are the two ways an equity investor can benefit from his or her investment?

    <p>By receiving dividends or selling their stock</p> Signup and view all the answers

    What is the main difference between equity investors and debt investors?

    <p>Equity investors become owners of the business, but debt investors do not.</p> Signup and view all the answers

    What do dividends represent in the context of corporations?

    <p>Payments made to stockholders by corporations</p> Signup and view all the answers

    What is one way creditors differ from stockholders?

    <p>Stockholders have the legal right to receive back the money loaned, called the principal.</p> Signup and view all the answers

    What is typically not guaranteed for equity investors?

    <p>Receiving dividends</p> Signup and view all the answers

    What is a common indicator for investors who buy stock in companies that have not paid dividends in the past?

    <p>The company's stock price will go up</p> Signup and view all the answers

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