Which of the following would be considered a "use" of cash for purpose of constructing a statement of cash flows?
A) selling the company's own common stock to investors.
B) issuing long-term debt.
C) purchasing equipment.
D) amortizing a patent.

Question

Quizplus · Accepted Answer

Purchasing equipment requires the use of cash and would be considered a cash outflow in the statement of cash flows.

The other options:

A) Selling the company's own common stock to investors would be considered a cash inflow in the financing section of the statement of cash flows because it is a source of financing, not a use of cash.

B) Issuing long-term debt would also be considered a cash inflow in the financing section because it is a source of financing.

D) Amortizing a patent would not be considered a use of cash because it is a non-cash expense that is added back to net income in the operating section of the statement of cash flows.

Which of the Following Would Be Considered a "Use" of Cash