ACCA Applied Knowledge · Financial Accounting · Statement of cash flows (excluding partnerships)
Which of the following would be shown as a financing activity in a statement of cash flows prepared under IAS 7?
Proceeds from a rights issue of equity shares is a financing activity, because it raises capital from owners. Cash received from customers is operating, buying plant is investing, and dividends received from an associate are not financing cash flows.
- AProceeds from a rights issue of equity sharesCorrect
- BCash received from customers
- CPurchase of plant and machinery for cash
- DDividends received from an associate
Explanation
Proceeds from issuing shares change the equity and borrowings of the entity, so they are financing. Cash from customers is operating, purchase of plant is investing, and dividends received are normally classified as investing (or operating).
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