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During the month of August,Boyce Company had the following transactions:
(1)Revenues of $120,000 were earned and received in cash.
(2)Bank loans of $18,000 were paid off.
(3)Equipment of $40,000 was purchased with cash.
(4)Expenses of $73,600 were paid.
(5)Stockholders purchased additional shares for $44,000 cash.
-A statement of cash flows for August would report net cash flows from financing activities of:
A)$40,000.
B)$26,000.
C)$46,400.
D)$32,400.

Question

Quizplus · Accepted Answer

Financing activities include transactions involving debt, equity, and dividends. Here, paying off bank loans ($18,000) is a cash outflow, and stockholders purchasing additional shares ($44,000) is a cash inflow. The net cash flow from financing activities is the inflow minus the outflow: $44,000 - $18,000 = $26,000.

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