A company issued 1,000 shares of $10 par value common stock due to a previously declared stock dividend;the market value at both the date of declaration and distribution was $12 per share.Which of the following correctly describes the reporting of this stock issue within the financing activities section of the cash flow statement?
A)A cash outflow of $12,000.
B)A cash outflow of $10,000.
C)A cash outflow of $2,000.
D)There is no cash flow.

Question

Quizplus · Accepted Answer

The issuance of stock as a dividend does not involve any cash flow, as it is a transfer of ownership of the company's resources from retained earnings to common stock. Therefore, this transaction would not be reported within the financing activities section of the cash flow statement.

A Company Issued 1,000 Shares of $10 Par Value Common