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A company issues common stock for cash. In which section of the statement of cash flows does this appear?
AOperating activities
BFinancing activities
CInvesting activities
DCurrent liabilities section
Answer & Solution
Correct answer: B. Financing activities
1. Financing activities involve raising funds through long-term debt or equity accounts.
2. Issuing common or preferred stock is explicitly a financing activity.
3. Investing relates to buying/selling long-term assets, not issuing the firm's own stock.
4. Operating relates to income statement items and working capital.
_Source: Jonick, Principles of Financial Accounting (CC BY-SA 4.0), §7.2.1 "Types of Business Activities", p.265_
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