Which of the following is an example of a cash outflow for a financing activity? Payment...
Which of the following is an example of a cash outflow for a financing activity?
Payment of cash for supplies
Payment of cash for the purchase of equipment
Payment of cash for interest expense
Payment of cash for treasury stock
Homework Answers
Correct answer----------Payment of cash for treasury stock.
.
Payment to supplier and interest expense is operating cash outflow whereas payment for equipment is investing cash outflow.
Payment for treasury stock on the other hand is a financing cash outflow. Shares of own company are purchased in open market. It is a financing activity because treasury stock reduce paid in capital of the company.
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