Question

Indicate which of the following has an effect on financing cash flows.
a. Notes payable with a carrying value of $17,200 are retired for $19,300 cash, resulting in a $2,100 loss.
b. Paid cash dividends of $13,200 to common stockholders.
c. Acquired $22,200 worth of machinery in exchange for common stock.

Answer 1

Answer:

b. Paid cash dividends of $13,200 to common stockholders.

Explanation:

Cash flows from financing is the cash gained or spent from raising capital or paying it's investors. It primarily measured flow of cash between a business and its owners and creditors.

Includes the following activities: paying dividends, obtaining loans, issuing and selling stock, repurchasing stocks, and paying long-term debt.

Positive cash flows from financing means the firm gets inflow of cash while negative flow means firm gives out cash.

Paying dividends to stockholders is a financing activity that involves outflow of cash from the firm to its owners.