Final answer:
Cash received from issuing stock or bonds is reported as financing activities in the statement of cash flows, reflecting the different ways firms can access financial capital for expansion.
Step-by-step explanation:
Cash received from the sale of common and preferred stock and the issuance of bonds and other debt securities are reported on the statement of cash flows as financing activities. Firms access financial capital to fund their operations and growth, and they can choose different methods for doing so. One option is to borrow through various debt instruments such as bank loans or bonds. While this commits the firm to regular interest payments, it also allows the firm to retain control over its operations without the influence of shareholders.
On the other hand, issuing stock involves selling portions of ownership in the company to the public. This can provide significant capital for expansion but comes with the responsibility to a board of directors and shareholders. Stock issuance increases a company's visibility in financial markets but also requires adherence to regulatory frameworks and reporting obligations.