In a Statement of Cash Flows, Which of the Following

question 107

Multiple Choice

In a statement of cash flows, which of the following would be classified as an investing activity?

• A) The sale of the company's own common stock for cash.
• B) The sale of equipment.
• C) Interest paid to a lender.
• D) The issuance of bonds payable.

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Definitions:

Financing Activities

Transactions that result in changes in the size and composition of the equity capital or borrowings of the company.

Dividends

A distribution of a portion of a company's earnings to its shareholders, usually determined by the board of directors.

Operating Activities

Cash flows directly related to the production and delivery of a company's goods and services.

Direct Method

A method of reporting the cash flows from operating activities as the difference between the operating cash receipts and the operating cash payments.