Selling New Shares Is an Equity Transaction; It Does Not

question 38

True/False

Selling new shares is an equity transaction; it does not affect any asset or liability account and therefore, does not appear on the statement of cash flows.

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Definitions:

Planning Budget

A financial plan that estimates the revenue and expenses for a specific period, often used for setting performance expectations.

Revenue and Spending Variance

The difference between the budgeted and actual amounts of revenue and expenditure over a specific period.

Net Operating Income

Income from a company's core business operations, excluding deductions of interest and taxes.

Flexible Budget

A budget that adjusts or flexes with changes in volume or activity levels of the business, allowing for more accurate budgeting and performance evaluation.