Question

Which of the following activities is not correctly associated with its cash flow classification? A) Operating – Sale of merchandise for cash B) Financing - Sale of company’s Preferred Stock C) Investing – Purchase of Treasury Stock D) Operating – Purchase of advertising for the year

Answer 1

Answer: The following activities is not correctly associated with its cash flow classification: Investing – Purchase of Treasury Stock

Treasury stock can be stated as the prominent stock bought back from stockholders by  issuing organization. The shares that are issued but not prominent and thereby are not enclosed in the computation of dividends.

The above statement false since Purchase of Treasury Stock is a Financing activity.