Which of the following activities typically involves cash outflows?

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Master the UCF ACG2021 Principles of Financial Accounting Final Exam. Study with comprehensive practice tests, flashcards, and multiple choice questions, each with detailed explanations. Ace your exam!

Paying suppliers typically involves cash outflows because this activity represents the payment of funds to vendors or suppliers for goods and services received. When a company makes purchases for its operations, such as inventory, materials, or even services necessary for producing its products, it incurs expenses that result in cash being paid out of the business. This cash outflow is a part of the operating activities of the company, which is essential for maintaining and running daily operations.

In contrast, revenue from sales represents cash inflows, as it signifies money coming into the business from selling products or services. Obtaining loans is also a cash inflow because it involves receiving funds that the company must eventually repay. Investment income, while it may represent earnings, does not involve an immediate cash outflow and often signifies cash inflows from investments made previously. Thus, paying suppliers is the relevant activity here that directly corresponds to cash outflows in a business's financial transactions.