Multiple Choice
In which section of the statement of cash flows would the cash received from the sale of equipment be reported?
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13. Statement of Cash Flows
Introduction to the Statement of Cash Flows
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Which of the following is typically included in cash flows from financing activities on the statement of cash flows?
A
Issuance of common stock
B
Payment of salaries to employees
C
Purchase of inventory
D
Depreciation expense
Verified step by step guidance1
Understand the concept of cash flows from financing activities: These are cash transactions related to the company's financing, such as issuing stock, borrowing, or repaying debt.
Review the options provided in the problem: Issuance of common stock, Payment of salaries to employees, Purchase of inventory, and Depreciation expense.
Eliminate options that are not financing activities: Payment of salaries to employees and Purchase of inventory are operating activities, while Depreciation expense is a non-cash item and does not appear in the cash flow statement.
Focus on the issuance of common stock: This is a financing activity because it involves raising capital by issuing equity to investors.
Conclude that the correct answer is 'Issuance of common stock' as it directly relates to cash flows from financing activities.
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