Which of the following statements is false?
A) A share dividend has no impact on cash.
B) Repurchase of shares (treasury shares) and payment of cash dividends reduce cash flow from financing activities.
C) Issuance of preferred shares would increase cash from financing activities.
D) Repurchases of shares at prices lower than the average issue price result in profit for the issuing company.

Question

Quizplus · Accepted Answer

Repurchases of shares do not directly result in profit or loss for the issuing company. Profit or loss is recognized in the financial performance of the company through its operations, not through transactions in its own shares. The repurchase of shares at prices lower than the average issue price affects the equity section of the balance sheet but does not directly impact the income statement where profit or loss is recorded.

Which of the Following Statements Is False