Which of the Following Is Incorrect Regarding the Financing Activities

question 37

Multiple Choice

Which of the following is incorrect regarding the financing activities section of a statement of cash flows?

• A) Increases in Contributed Capital accounts suggest cash inflows occurred from issuing equity instruments.
• B) Decreases in Long-Term Debt accounts suggest cash outflows occurred for payment of debt.
• C) Increases in Short-Term Notes Payable accounts suggest cash outflows occurred from issuing notes or bonds.
• D) Decreases in retained earnings suggest cash outflows occurred to pay dividends.

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Definitions:

Specified Date

A particular or agreed upon day on which an event is scheduled to occur or a deadline is to be met.

Time Instrument

A document promising payment of a certain amount of money at a fixed or determinable future time, such as a promissory note or check.

Payment

The transfer of money or goods from one party to another as compensation for goods, services, or to fulfill a legal obligation.

Check Clearing

The process by which banks exchange checks and settle funds, ensuring that the amount specified on the check is transferred from the payer's account to the payee's account.