Question

A firm's cash flow from financing activities includes: Select one: A. Cash paid for merchandise purchased B. Cash received from sale of investment in bonds C. Cash received as interest income D. Cash paid to reacquire treasury stock

Answer 1

Answer:

A firm's cash flow from financing activities includes:

D. Cash paid to reacquire treasury stock.

Explanation:

The cash paid to reacquire treasury stock is a financing cash outflow.  It reduces the cash inflow from financing activities and forms part of the financing activities of the company under the Statement of Cash Flows.  In this financial statement, cash flows are classified into three main groups or activities: operating activities, investing activities, and financing activities.  This classification helps to define the source of the cash flow.