Question
In: Accounting
Cash flows from operating activities on the Cash Flow Statement includes things such as issuing stock...
Cash flows from operating activities on the Cash Flow Statement includes things such as issuing stock and debt.
Group of answer choices
A) True
B) False
Solutions
Expert Solution
False.
Proceeds from the issuance of stock or debt are all entries that should be included in the cash flow from financing activities.
We know that cash flow statement consists of operating cash flow, cash flow from investing activities and cash flow from financing activities. Cash flow from financing activities are the section which says that how the company make or raise funds. Operating activities usually includes payment to suppliers and other related to cost of goods sold.
Issuance of stock and issuance of debt are the ways for a company to raise the fund. So these entries will not come under operating activities because these are related to financing activities.
Hence, the statement is false.
SUMMARY :
The given statement is false. Because issuance of stock or debt are those activities which comes under the financing activities in a cash flow statement and not under cash flow from operating activities.
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