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Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773

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BuyFindarrow_forward

Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773
Textbook Problem
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Raising cash by issuing capital stock is an example of

  1. a. a financing activity.
  2. b. an investing activity.
  3. c. an operating activity.
  4. d. a noncash transaction.
  5. e. None of these.

To determine

Identify the activity which raising cash by issuing capital stock is an example of.

Explanation

Cash Flows from Financing Activities:

This category of a cash flow statement includes those activities which help a company to raise cash from creditors and owners. Financing activities basically show those activities that are required to fund a company.

a.

Raising cash by issuing capital stock is a financing activity. The financing activities help provide cash to the owners, and the issuing of capital stock also helps a company to raise cash. Therefore, this option is correct.

b.

Raising cash by issuing capital stock is not an investing activity. The investing activities include the purchase or sale of long-term assets in a company...

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