[MinSeokYi]

A company is preparing its year-end cash flow statement using the indirect method. During the year, the

following transactions occurred:

Dividends paid $300

Proceeds from the issuance of common stock 250

Borrowings under a line of credit 200

Proceeds from the issuance of convertible bonds 100

Proceeds from the sale of a building 150

What is the company’s increase in cash flows provided by financing activities for the year?

a. $50

b. $150

c. $250

d. $550

Can someone explain this to me? (I might be understanding the question wrong)

BEC: Passed
REG: Passed
FAR: Almost Past (lol)
AUD: I thought I passed with flying colors, but I wasn't close!

[NYCaccountant]

I got C – 250 for this question. Line items 2-5 are proceeds used to finance the operations of a company, hence Financing activity. The proceeds on the sale of a building should be classified in investment activity. The dividends are simply a return

on equity to shareholders, which is a reduction within the financing activities of an enterprise. I have am not totally sure of that

answer because I have not done the cash flow module in Wiley yet.

FAR - 93
REG - 87
BEC - 84!!!!
AUD - 99!!!!!! CPA exam complete.

[Author]

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