Which of the following statements is correct?
Posted: Sat Aug 07, 2021 6:57 am
A) The payment of a cash dividend reduces net income.
B) Cash received from issuing common stock to stockholders is reported as a financing activity
cash flow within the statement of cash flows.
C) Providing services to a customer on account does not impact net income.
D) The purchase of manufacturing equipment is reported within the statement of cash flows as a
financing activity.
Answer: B
Explanation: Issuing common stock is a financing activity and the cash received as a result of
this is reported in the financing section of the statement of cash flows.
B) Cash received from issuing common stock to stockholders is reported as a financing activity
cash flow within the statement of cash flows.
C) Providing services to a customer on account does not impact net income.
D) The purchase of manufacturing equipment is reported within the statement of cash flows as a
financing activity.
Answer: B
Explanation: Issuing common stock is a financing activity and the cash received as a result of
this is reported in the financing section of the statement of cash flows.