Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

13. Statement of Cash Flows

Introduction to the Statement of Cash Flows

Financial Accounting

13. Statement of Cash Flows

Introduction to the Statement of Cash Flows

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Multiple Choice

Which of the following is an addition to cash flows from financing activities on the statement of cash flows?

Payment of dividends

Purchase of equipment

Interest received on investments

Proceeds from issuing common stock

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Understand the structure of the statement of cash flows, which is divided into three main sections: operating activities, investing activities, and financing activities. Financing activities involve transactions that affect the company's equity and borrowings.

Identify the nature of each option provided in the problem: Payment of dividends is a cash outflow related to financing activities, Purchase of equipment is a cash outflow related to investing activities, and Interest received on investments is a cash inflow related to operating activities.

Recognize that proceeds from issuing common stock represent a cash inflow under financing activities because it involves raising funds by issuing equity to shareholders.

Recall that financing activities include transactions such as issuing stock, borrowing funds, repaying debt, and paying dividends. Proceeds from issuing common stock fit into this category as an addition to cash flows.

Conclude that the correct answer is proceeds from issuing common stock, as it is the only option that represents an addition to cash flows from financing activities on the statement of cash flows.