Final answer:
The proceeds from issuing capital stock are recorded under the financing activities section in the statement of cash flows, which helps firms raise funds for expansion without the need to repay the capital.
Step-by-step explanation:
The proceeds from the issuance of capital stock appear under the financing activities section of the statement of cash flows. Issuing stock allows a firm to access financial capital for expansion and operates as an alternative to borrowing through bank loans or bond issuance. Because issuing stock does not require repayment like debt financing, it can be advantageous for a growing firm. However, it does entail the selling off of ownership in the company and involves costs for investment bankers, legal advisors, and regulatory compliance with organizations such as the SEC.