Question

The statement of cash flows for Baldwin shows what happens in the cash account during the year. It can be seen as a summary of the sources and uses of cash. Pleas answer which of the following is true if Baldwin issues bonds

Answer 1

If Baldwin issues bonds, the following statement would be true regarding the statement of cash flows:

The statement of cash flows would show an increase in the cash account due to the inflow of cash from the issuance of bonds.

When a company issues bonds, it typically receives cash from the bondholders as a form of borrowing. This inflow of cash would be categorized as a financing activity on the statement of cash flows. The specific section of the statement of cash flows that would capture this inflow would be the "Cash Flows from Financing Activities" section.

Therefore, if Baldwin issues bonds, the statement of cash flows would reflect an increase in the cash account due to the inflow of cash from the bond issuance.