Question

Edward works as an accountant for a large company. He is currently preparing the company’s cash flow statement. The company raised $3 million during the year by issuing public shares. Under which category of business activities appearing in a cash flow statement should Edward record the given amount? Edward should record this amount as a cash inflow resulting from activities.

Answer 1

The amount of $3 million raised by issuing public shares should be recorded as a cash inflow resulting from financing activities in the cash flow statement.

Step-by-step explanation:

In the cash flow statement, the amount of $3 million raised by issuing public shares should be recorded as a cash inflow resulting from financing activities. Financing activities include activities that involve obtaining or repaying capital to help the company meet its financial needs, such as issuing or redeeming shares, borrowing or repaying loans, or paying dividends.