Asked by Lucinda Donaldson on Jul 08, 2024
Verified
Issuing stock in exchange for cash creates an increase in cash from a financing activity.
Issuing Stock
The process by which a company sells new shares to investors to raise capital.
Financing Activity
Transactions and events where cash is raised from or repaid to investors, influencing the equity and debt of a company.
Cash
Money in the form of currency that can be used immediately for transactions.
- Understanding the significance of financial reporting and its aim to offer valuable information to those making decisions externally.
- Comprehending how transactions are recorded and their impact on the accounting equation and financial statements.
Verified Answer
JA
James Albright
Jul 11, 2024
Final Answer :
True
Explanation :
Issuing stock means the company is selling ownership to investors in exchange for cash, which is classified as a financing activity on the statement of cash flows.
Learning Objectives
- Understanding the significance of financial reporting and its aim to offer valuable information to those making decisions externally.
- Comprehending how transactions are recorded and their impact on the accounting equation and financial statements.