Issuing common stock in exchange for equipment will create a cash outflow in the investing activities section of the cash flow statement and a cash inflow in the financing activities section of the cash flow statement.

Question

Quizplus · Accepted Answer

Issuing common stock is a financing activity, so it would create a cash inflow in the financing activities section of the cash flow statement. Meanwhile, acquiring equipment is an investing activity, so it would create a cash outflow in the investing activities section of the cash flow statement.

Issuing Common Stock in Exchange for Equipment Will Create a Cash