Question

The effect of stockholders' equity items on the statement of cash flows is:

a. The cash outflow from the sale of stock to stockholders should be reflected as an inflow in the.
Financing Activities section of the statement of cash flows.
b. The cash inflow from the sale of stock to stockholders should be reflected as an inflow in the Financing Activities section of the statement of cash flows.
c. Reflected in the Operating Activities section of the statement of cash flows.
d. Reflected in the Investing Activities section of the statement of cash flows.

Answer 1

The cash inflow from the sale of stock to stockholders should be reflected as an inflow in the Financing Activities section of the statement of cash flows.

Step-by-step explanation:

The effect of stockholders' equity items on the statement of cash flows is:

b. The cash inflow from the sale of stock to stockholders should be reflected as an inflow in the Financing Activities section of the statement of cash flows.

When a company issues stock to shareholders, it receives cash in return. This cash inflow is classified as an activity in the Financing Activities section of the statement of cash flows because it involves transactions related to the company's capital structure and financing activities.