The acquisition of treasury stock with cash is shown as a financing activity on the statement of cash flows.

Question

Quizplus · Accepted Answer

When a company acquires its own shares, it reduces the number of outstanding shares and increases the percentage of ownership for the remaining shareholders. The cash used to purchase the shares is considered a financing activity because it affects the company's capital structure and equity position. This activity is reported in the financing section of the statement of cash flows.

The Acquisition of Treasury Stock with Cash Is Shown as a Financing