Emerson Industries sold a new issue of common stock to investors. How would this

Question

Emerson Industries sold a new issue of common stock to investors. How would this be recorded differently in the statement of cash flows than if they used the stock to purchase equipment?

a.  The sale of stock to investors should be included in cash flows from financing activities, whereas exchange of stock for equipment should be disclosed in a separate schedule.

b.  The sale of stock to investors should be disclosed in a separate schedule, whereas exchange of stock for equipment should be included in cash flows from investing activities.

c.  The sale of stock to investors should be included in cash flows from investing activities, whereas the exchange of stock for equipment should be included in cash flows from financing activities.

d.  The sale of stock to investors should not be disclosed in the statement of cash flows, whereas exchange of stock for equipment should be disclosed in a separate schedule.

Explanation / Answer

Sale of new issue of common stock shoule be included in cash flow from financing activity and if common stock exchange with purchase of equipment should be disclosed in separate schedule (non cash activity).

so answer is a.  The sale of stock to investors should be included in cash flows from financing activities, whereas exchange of stock for equipment should be disclosed in a separate schedule.

Related Questions

Navigate

• Browse (All)
• Browse E
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.