Which of the following would not be reported as a financing activities cash flow?

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BlackTom AI · Accepted Answer

To answer this, we need to classify each option according to the cash flow statement categories: operating, investing, and financing.
Option 1: Paying cash dividends to shareholders. This is a financing activity because it involves returning capital to owners and is reported as a financing cash outflow.
Option 2: Purchase of a building by signing a note payable. This transaction results in acquiring a long-term asset (investing activity) and uses a non-cash or financed path to fund the purchase. Since a note payable is a financing instrument, but the act of purchasing the building itself is an investing activity; the cash flow impact is not a financing cash outflow, so it is not reported as financing.
Option 3: Issuing common stock for cash. This directly affects equity and cash, representing a financing activity since it raises funds from owners and is reported as a financing cash inflow.
Option 4: Repurchasing your company's shares. This is a financing activity because it involves reacquiring equity and is reported as a financing cash outflow.
In summary, you categorize the activities by their economic purpose: financing activities involve debt, equity, and distributions to owners; investing activities involve acquiring or disposing of long-term assets; operating activities involve the core business operations. The building purchase funded by a note payable is tied to investing activities rather than financing activities, making it the activity not reported as a financing cash flow.

ACCT 2051 (070) Exam #3

Which of the following would not be reported as a financing activities cash flow?

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