Is fixtures an operating, investing or financing activity? (1 Viewer)

[jimmysmith560]

Is fixtures an operating, investing or financing activity?

Operating costs include wages, advertising, insurance, interests on loans, telephone and electricity costs, rent as well as vehicle costs. Such expenses must be paid for the business to maintain its operations.

Fixtures can be classified under establishment costs as they are essential costs involved in setting up the business. Based on this, fixtures can be regarded as an investment. This investment constitutes a smaller part of a larger overall investment, from which the business expects a reasonable return. In the case where an existing business is being purchased (such as in the examples below), fixtures can also be considered a minor investment that makes up part of a bigger investment:



Financing is a different concept, it is the process of providing funds for business activities. Finance can be acquired in two ways:

• Debt finance
• Equity finance

I hope this helps!

 

[chrstinee]

For fixtures I am putting it into a cash flow statement so is it considered operating?

 

[jimmysmith560]

For fixtures I am putting it into a cash flow statement so is it considered operating?

In that case yes, fixtures can be classified as an operating expense. If we consider specific examples such as lighting and maintenance (e.g. plumbing), those can definitely be classified as operating expenses because they are essential to the effective running of the business's operations.

 

[chrstinee]

In that case yes, fixtures can be classified as an operating expense. If we consider specific examples such as lighting and maintenance (e.g. plumbing), those can definitely be classified as operating expenses because they are essential to the effective running of the business's operations.

thank you! also is fixtures and insurance considered the same thing on the cashflow statement? because doesn't insurance cover fixtures? kinda confused on that

 

[jimmysmith560]

thank you! also is fixtures and insurance considered the same thing on the cashflow statement? because doesn't insurance cover fixtures? kinda confused on that

No worries. Are you asking whether fixtures and insurance are both classified as operating expenses in the cash flow statement? The answer to that is yes.

If you are asking whether they are combined and listed as one expense on the cash flow statement, then that would probably not be the case. I say probably because while this is not normally the case, different business have different ways of generating their cash flow statements. That said, I still believe they are listed separately.

 

[chrstinee]

No worries. Are you asking whether fixtures and insurance are both classified as operating expenses in the cash flow statement? The answer to that is yes.

If you are asking whether they are combined and listed as one expense on the cash flow statement, then that would probably not be the case. I say probably because while this is not normally the case, different business have different ways of generating their cash flow statements. That said, I still believe they are listed separately.

Thanks! makes so much sense now.

 

[jimmysmith560]

Thanks! makes so much sense now.

No worries! All the best!