Which of the following is an example of a cash outflow for a financing activity?Multiple ChoicePayment of cash for suppliesPayment of cash for the purchase of equipmentPayment of cash for treasury stockPayment of cash for interest expense
Question
Which of the following is an example of a cash outflow for a financing activity?Multiple ChoicePayment of cash for suppliesPayment of cash for the purchase of equipmentPayment of cash for treasury stockPayment of cash for interest expense
Solution
The correct answer is "Payment of cash for treasury stock". This is considered a financing activity because it involves transactions designed to finance the business and its operations. These activities primarily involve the issuance and reacquisition of the company's own bonds or stocks as well as dividend payments. Therefore, when a company pays cash to reacquire its own stock (treasury stock), it is considered a cash outflow for a financing activity.
Similar Questions
MC Qu. 33 (LO11-5) Which of the following is an example... Which of the following is an example of a cash outflow from financing activities? Multiple Choice Payment of interest. Purchase of an investment. Payment of cash dividends. Purchase of equipment.
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Which of the following is an example of a cash inflow from an investing activity?Multiple ChoiceReceipt of cash from customersReceipt of cash from the sale of equipmentReceipt of cash from the issuance of common stockReceipt of cash from the issuance of bonds
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