In preparing a statement of cash flows a conversion of bonds into common stock will be reported in
A) the financing section.
B) the "extraordinary" section.
C) a separate schedule or note to the financial statements.
D) the stockholders' equity section.

Question

Quizplus · Accepted Answer

The conversion of bonds into common stock is a non-cash transaction that does not affect cash flows directly. Therefore, it is not reported in the main sections of the cash flow statement (operating, investing, or financing) but is disclosed in a separate schedule or note to the financial statements to provide more detail about the company's financing activities.

In Preparing a Statement of Cash Flows a Conversion of Bonds