Baltimore Company had a long-term debt of $1,000,000. To extinguish this debt the company issued $1,000,000 of fully paid shares to the lender. This transaction would have the following impact on the cash flow statement: a. decrease cash by $1,000,000. b. nil impact. This is a non-cash transaction. c. increase cash flow from financing activities by $1,000,000. d. increase cash by $1,000,000.

Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter15: Statement Of Cash Flows
Section: Chapter Questions
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Baltimore Company had a long-term debt of $1,000,000. To extinguish this debt the company issued $1,000,000 of fully paid shares to the lender. This transaction would have the following impact on the cash flow statement: a. decrease cash by $1,000,000. b. nil impact. This is a non-cash transaction. c. increase cash flow from financing activities by $1,000,000. d. increase cash by $1,000,000.
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