Question

Which of the following are cash outflows from financing activities?

a) repayment of note payable
b) payment of income taxes
c) payment of dividends
d) purchase of equipment
e) issuance of common stock

Answer 1

Repayment of note payable and payment of dividends are cash outflows from financing activities. Payment of income taxes and purchase of equipment are not financing activities. Issuance of common stock is a cash inflow, not outflow, from financing activities.

Step-by-step explanation:

Among the options provided, cash outflows from financing activities in a company's cash flow statement include repayment of note payable and payment of dividends. Repayment of note payable is a cash outflow because it represents money leaving the company to reduce its debt obligations. Similarly, payment of dividends is an outflow since it is a distribution of profits to shareholders. The other options, such as payment of income taxes and purchase of equipment, are considered cash outflows from operating and investing activities, respectively. The issuance of common stock, on the other hand, is a cash inflow from financing activities as it represents new capital being introduced into the business from shareholders.