Wisconsin,Inc.owed one of its creditors $350,000,but it did not have enough cash to repay the debt.Following lengthy negotiations,the parties agreed that Wisconsin,Inc.would issue 50,000 shares of common stock to settle the debt.On the statement of cash flows,this transaction is shown in the ________.
A) investing activities section
B) financing activities section
C) operating activities section
D) non-cash investing and financing activities section

Question

Quizplus · Accepted Answer

Issuing shares to settle a debt is considered a non-cash transaction and is reported in the non-cash investing and financing activities section of the statement of cash flows. This section captures significant activities that do not directly affect cash but significantly impact the company's financial position.