In preparing a statement of cash flows, repurchase of a company's own shares at an amount greater than cost would be classified as a(n)
A)operating activity.
B)financing activity.
C)extraordinary activity.
D)investing activity.

Question

Quizplus · Accepted Answer

Repurchase of a company's own shares is a financing activity because it involves the use of funds obtained from external sources such as debt or equity to repurchase shares. The amount paid for repurchasing own shares may be greater than the cost of those shares, resulting in a reduction in shareholders' equity.

In Preparing a Statement of Cash Flows, Repurchase of a Company's