Each of the following are classified as a financing activity except:

• A. Purchasing equipment for cash
• B. Borrowing money from a bank
• C. Paying dividends to shareholders
• D. Issuing common stock

Answer: (A)

Verified step by step guidance

1. Step 1: Understand the concept of financing activities. Financing activities are transactions that involve raising capital or returning capital to investors. These activities typically include borrowing money, issuing stock, and paying dividends.
2. Step 2: Review the options provided in the problem. Identify which activities are related to financing and which are not. The options are: Purchasing equipment for cash, Borrowing money from a bank, Paying dividends to shareholders, and Issuing common stock.
3. Step 3: Analyze 'Purchasing equipment for cash.' This activity is classified as an investing activity because it involves acquiring long-term assets, not raising or returning capital.
4. Step 4: Analyze the other options: Borrowing money from a bank is a financing activity because it involves raising capital. Paying dividends to shareholders is a financing activity because it involves returning capital to investors. Issuing common stock is a financing activity because it involves raising capital from shareholders.
5. Step 5: Conclude that 'Purchasing equipment for cash' is the correct answer because it is classified as an investing activity, not a financing activity.