Which of the following represents a cash inflow from financing activities?

• A. Payment of dividends to shareholders
• B. Collection of accounts receivable
• C. Issuance of common stock for cash
• D. Purchase of equipment for cash

Answer: (C)

Verified step by step guidance

1. Step 1: Understand the concept of financing activities. Financing activities are transactions that involve raising capital or returning capital to investors. These activities typically include issuing stock, borrowing funds, or repaying debt.
2. Step 2: Analyze each option provided in the problem to determine whether it represents a cash inflow or outflow from financing activities.
3. Step 3: Evaluate 'Payment of dividends to shareholders.' This represents a cash outflow from financing activities because it involves returning capital to investors.
4. Step 4: Evaluate 'Collection of accounts receivable.' This is a cash inflow, but it is classified under operating activities, not financing activities, as it relates to the company's core operations.
5. Step 5: Evaluate 'Issuance of common stock for cash.' This represents a cash inflow from financing activities because it involves raising capital by issuing equity to investors.