The appropriate section in the statement of cash flows for reporting the issuance of common stock for cash is:
A)Operating activities.
B)Financing activities.
C)Investing activities.
D)Schedule of noncash investing or financing activity.
E)This is not reported on the statement of cash flows.

Question

Quizplus · Accepted Answer

Issuing common stock for cash is a financing activity because it involves raising funds from external parties. The statement of cash flows separates cash inflows and outflows into three categories: operating activities, investing activities, and financing activities. The issuance of common stock for cash falls under financing activities, which include activities related to the company's financing of its operations, such as issuing and repurchasing equity and debt securities, paying dividends or interest, and borrowing or repaying loans.

The Appropriate Section in the Statement of Cash Flows for Reporting