Question

3. In cash flows, a firm that issues stocks and bonds to raise funds results in...

3. In cash flows, a firm that issues stocks and bonds to raise funds results in

A) Decreases Cash

B) Increases Cash

C) Increases Equity

D) Increases Liabilities

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Homework Answers

Answer #1

Issue of stock and bonds Increases the cash flow from financing activities. This activity Increases the cash flow in the firm as the issue of stock and bonds bring in more cash to the firm.

There will be no effect on the Liabilities as this part is related to the equity sector. Also in the cash flow statement, there is no segment of equity, so it increases the cash in financing activity.

Therefore the correct option is B

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