What do financing activities within a cash flow statement include?

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Master the UCF ACG2021 Principles of Financial Accounting Final Exam. Study with comprehensive practice tests, flashcards, and multiple choice questions, each with detailed explanations. Ace your exam!

Financing activities within a cash flow statement refer specifically to cash transactions that involve the funding of a business through both debt and equity. These activities are crucial for understanding how a company raises capital and manages its financial structure.

The inclusion of long-term debt transactions means any cash inflows received from borrowing—as well as cash outflows when repaying that debt—are accounted for in this section of the cash flow statement. Similarly, stockholder equity transactions encompass cash received from issuing shares or cash paid out as dividends. This highlights how the company is financed through various methods, impacting its overall capital structure.

In contrast, cash sales and expenses primarily relate to operational activities, while investment-related cash flows deal with the purchase and sale of long-term assets, neither of which fall into financing activities. Thus, option C captures the essence of financing activities by addressing how a company interacts with its investors and creditors, making it the correct choice for this question.