Which of the following would be classified a cash inflow from investing activities?
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A. B. C. D.Explanation
All other responses qualify as cash flows from financing activities.
A cash inflow from investing activities refers to the receipt of cash resulting from investment-related transactions. Let's analyze each option to determine which one qualifies as a cash inflow from investing activities:
A. Cash paid to retire bonds: This option involves the payment of cash to retire or repurchase bonds. It represents a cash outflow rather than a cash inflow from investing activities. It relates to financing activities, as it involves the repayment of debt.
B. Proceeds from issuing stock: This option involves the receipt of cash from issuing new shares of stock. It represents a cash inflow from financing activities, not investing activities. When a company issues stock, it receives capital from investors in exchange for ownership in the company. Therefore, it is classified as a financing activity.
C. Cash paid for dividends: This option involves the payment of cash to distribute dividends to shareholders. It represents a cash outflow and is classified as a cash outflow from financing activities. Dividends are distributions of profits to shareholders and are therefore associated with financing, rather than investing activities.
D. Proceeds from selling investments in the equity securities of other companies: This option involves the sale of investments in equity securities of other companies and represents a cash inflow. It is classified as a cash inflow from investing activities because it reflects the disposal of long-term investments in equity securities. When a company sells such investments, it receives cash, which qualifies as a cash inflow related to investing activities.
Therefore, the correct answer is D. Proceeds from selling investments in the equity securities of other companies, as it represents a cash inflow from investing activities.