In preparing a statement of cash flows,sale of treasury stock at an amount greater than cost would be classified as a(n)
A) transfer activity.
B) operating activity.
C) investing activity.
D) financing activity.

Question

Quizplus · Accepted Answer

Sale of treasury stock is a financing activity since it involves a transaction between the company and its owners/shareholders. Additionally, selling treasury stock at an amount greater than cost results in a gain that is reported as a financing cash inflow in the statement of cash flows.

In Preparing a Statement of Cash Flows,sale of Treasury Stock