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An e-commerce company dealing in industrial equipments recently partnered with a logistics company for the smooth delivery of their products. Which of the following items should be classified as an operating activity for this company?(Note: More than one option may be correct.)Marketing expensesWebsite maintenance costPayment to logistics and delivery services companyInterest payments on loan taken from bank

Question

An e-commerce company dealing in industrial equipments recently partnered with a logistics company for the smooth delivery of their products. Which of the following items should be classified as an operating activity for this company?(Note: More than one option may be correct.)Marketing expensesWebsite maintenance costPayment to logistics and delivery services companyInterest payments on loan taken from bank

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Solution

The items that should be classified as an operating activity for the e-commerce company are:

  1. Marketing expenses
  2. Website maintenance cost
  3. Payment to logistics and delivery services company

These are all costs associated with the day-to-day operations of the business.

Interest payments on a loan taken from a bank, however, would typically be classified as a financing activity, not an operating activity. This is because it relates to the company's capital structure and how it finances its overall operations and growth by raising funds from investors, issuing debt or repaying loans.

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