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5 January, 01:02

Each of the following are classified as a noncash investing or financing activity except:

a. retirement of debt by issuing stock

b. reissuing treasury stock

c. purchase of long-term assets by issuing bonds

d. purchase of noncash assets by issuing equity

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  1. 5 January, 01:23
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    Answer: b. reissuing treasury stock

    Explanation:

    Investing Activities in the Cashflow Statement refer to transactions that have to do with the buying and selling of Capital Goods such as Fixed Assets. It also refers to investments in other company bonds and stock.

    Financing has to do with how the firm finances it's operations. These include long term debt and stock related transactions.

    When these transactions are non-cash, it means quite rightly that no cash was exchanged and instead something else for exchanged instead of cash. For example, A non-cash Investing and Financing activity would be the purchase of long-term assets by issuing bonds.

    In this question, option B being the reissuance of Treasury Stock is not a non-cash transaction. Treasury Stock is the company's own stock that it required from the market. By reissuing it, they will be doing so with cash involved. That is, people will buy the reissued shares and pay cash for them thus making it a Cash Financing Activity.
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