Which one of the following transactions should be classified as a financing activity on the statement of cash flows?

A) Purchase of equipment.
B) Purchase of the company's own stock.
C) Sale of a long-term investment.
D) Payment of interest to a lender.

Financing Activity

Transactions and events whereby resources are obtained from, or repaid to, owners (equity financing) and creditors (debt financing).

Purchase

The act of acquiring goods or services in exchange for money, constituting a fundamental business transaction.

Company's Own Stock

Shares of its own stock that a company has bought back from shareholders and holds in its treasury.