In preparing a statement of cash flows, the conversion of bonds into common shares will be reported in the
A)financing activities section.
B)notes to the financial statements.
C)investing activities section.
D)shareholders' equity section.

Question

Quizplus · Accepted Answer

The conversion of bonds into common shares is a non-cash transaction that does not affect cash flows directly. Therefore, it is not reported in the cash flows statement's main sections (operating, investing, or financing activities) but is disclosed in the notes to the financial statements to provide more detail about the company's financing activities and changes in its capital structure.

In Preparing a Statement of Cash Flows, the Conversion of Bonds