The purchase of treasury stock is classified in the statement of cash flows as a(n):
A)Operating activity.
B)Investing activity.
C)Financing activity.
D)Noncash activity.

Question

Quizplus · Accepted Answer

The purchase of treasury stock is considered a financing activity because it involves using cash from financing sources (such as retained earnings or borrowings) to buy back outstanding shares of the company's own stock. It is not an operating activity because it does not relate to the day-to-day operations of the business, and it is not an investing activity because it does not involve the acquisition or disposal of long-term assets or investments. It is also not a noncash activity because it involves the use of cash.

The Purchase of Treasury Stock Is Classified in the Statement