Answered: Which of the following would be…

Which of the following would be classified as an operating activity on the statement of cash flows? A) Issuance of stock B) Purchase of equipment C) Payment of interest D) Borrowing from a bank

Auditing: A Risk Based-Approach (MindTap Course List)

11th Edition

ISBN:9781337619455

Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Publisher:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Chapter10: Auditing Cash, Marketable Securities, And Complex Financial Instruments

Section: Chapter Questions

Problem 3CYBK

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Question

Which of the following would be classified as an operating activity on the statement of cash flows?

A) Issuance of stock
B) Purchase of equipment
C) Payment of interest
D) Borrowing from a bank

Definition Definition Net amount of cash that an entity receives and expends over the course of a given period. For a business to continue operating, positive cash flows are required, and they are also necessary to produce value for investors. Investors in particular prefer to see growing cash flows even after capital expenditures have been paid for (which is known as free cash flow).

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