Transnational Company Just Started in Business and Was Looking for Additional

question 7

Multiple Choice

Transnational Company just started in business and was looking for additional capital in order to purchase a property to build their headquarters. They found an investor who was willing to sell them land worth $500,000 in exchange for stock in the company. How would this transaction be shown on the statement of cash flows?

• A) In the investing activities section
• B) In the noncash investing and financing activities section
• C) In the operating activities section
• D) In the financing activities section

---

Definitions:

Share Certificate

A physical document certifying ownership of a particular number of shares in a company.

MBCA

Model Business Corporation Act, a template for state legislation that provides a statutory framework for the creation and operation of corporations within the United States.

Right of First Refusal

A contractual right that gives its holder the option to enter into a business transaction with the owner of something, before the owner is entitled to enter into that transaction with a third party.

Option Agreement

An agreement that gives a party the option, but not the obligation, to buy or sell an asset at a predetermined price and date.