Question 1

What primary factor should a creditor consider when evaluating whether a corporation can pay the interest and principal on a loan at maturity?

Question 2

Classify each of the following as an operating, investing, or financing activity under ASPE:

Loaning money

Receipt of cash from issuance of bonds payable

Receipt of cash from sale of equipment

Payments of acquisition of land

Receiving cash from customers

Receiving interest revenue

Payments for inventory

Payments for interest

Receipt of cash from issuance of stock

Dividends paid to shareholders

Receipt of dividend income

Payment of salaries to employees

Payment of taxes