Which of the following is reported as a financing activity in the statement of cash flows?
A) The sale of securities classified as available for sale.
B) The acquisition of stock for the purpose of retiring it.
C) The payment of interest on bonds payable.
D) The receipt of dividend revenue.

Question

Quizplus · Accepted Answer

The acquisition of stock for the purpose of retiring it is reported as a financing activity in the statement of cash flows. This is because it involves a reduction in the company's equity and typically involves the use of cash or other financing sources to fund the stock buyback.

Option A is reported as an investing activity, as it involves the sale of investments held for the purpose of earning a return.

Option C is reported as an operating activity, as it involves the payment of interest on debt used to finance the company's operations.

Option D is reported as an investing activity if the dividend revenue is received from investments, or as an operating activity if it relates to the company's primary operations.

Which of the Following Is Reported as a Financing Activity