Which of the following is an example of a financing activity in a cash flow statement?

Study for the UCF FIN3403 Business Finance Exam. Harness the power of flashcards and multiple-choice questions, each with hints and detailed explanations. Prepare confidently for this pivotal exam!

The correct choice reflects a financing activity because it involves transactions related to obtaining or repaying funds for business operations. Specifically, issuing new stock generates cash inflow from investors in exchange for equity in the company, which is a key part of financing activities. This type of transaction increases the company's capital without incurring debt, allowing it to potentially fund growth, pay down liabilities, or cover operational expenses.

In contrast, purchasing equipment is classified as an investing activity since it involves the acquisition of long-term assets that will be used in the business. Collecting customer payments is part of operating activities as it relates to the core business functions of generating revenue from sales. Paying suppliers is also an operating activity, as it involves the cash outflow necessary to cover expenses related to production and inventory. Thus, the choice of issuing new stock clearly stands out as the only financing activity listed.

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