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 considered a cash flow from financing activities on the statement of cash flows?

Paying suppliers for inventory

Purchasing equipment for cash

Receiving interest income

Issuing common stock for cash

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Verified step by step guidance

Understand the classification of cash flows: The statement of cash flows categorizes cash flows into three main activities: operating, investing, and financing. Financing activities involve transactions related to raising capital or repaying investors.

Analyze the options provided: Paying suppliers for inventory is an operating activity because it relates to the day-to-day operations of the business. Purchasing equipment for cash is an investing activity because it involves acquiring long-term assets. Receiving interest income is an operating activity because it is part of the company's regular income generation.

Focus on the correct answer: Issuing common stock for cash is a financing activity because it involves raising capital by selling ownership shares in the company.

Relate the correct answer to the definition of financing activities: Financing activities include transactions such as issuing stock, borrowing money, and repaying debt. Issuing common stock for cash fits this definition as it raises funds for the company.

Conclude the reasoning: Based on the classification of cash flows, issuing common stock for cash is correctly identified as a cash flow from financing activities on the statement of cash flows.