Which category in the statement of cash flows includes the issuance of debt and equity?

Which category in the statement of cash flows includes the issuance of debt and equity?

• A. Operating activities
• B. Financing activities
• C. Investing activities
• D. Tax activities

Answer: (B)

Issuing debt or issuing equity is a financing activity. The cash flow statementSeparate three sections: operating activities (cash from core business operations), investing activities (cash used for or received from long-term assets and investments), and financing activities (cash received from lenders or investors and cash paid to them, such as debt proceeds, debt repayments, stock issuance, and paying dividends). When a company issues debt or equity, it is obtaining capital or altering its capital structure, which is exactly what financing activities track. Operating activities reflect day-to-day business cash flows, and investing activities involve buying or selling long-term assets or investments, not raising capital. Taxes are typically reported within operating activities, not as a separate category.

Issuing debt or issuing equity is a financing activity. The cash flow statementSeparate three sections: operating activities (cash from core business operations), investing activities (cash used for or received from long-term assets and investments), and financing activities (cash received from lenders or investors and cash paid to them, such as debt proceeds, debt repayments, stock issuance, and paying dividends). When a company issues debt or equity, it is obtaining capital or altering its capital structure, which is exactly what financing activities track. Operating activities reflect day-to-day business cash flows, and investing activities involve buying or selling long-term assets or investments, not raising capital. Taxes are typically reported within operating activities, not as a separate category.