Answer :
Final answer:
Cash flow from financing activities is best described as the transactions related to issuing or repurchasing equity, taking out or repaying debt, and paying dividends or interest. So the correct option is 4) Increase (or minus decrease) in stock, plus increase (or minus decrease) in debt, minus interest paid, minus dividends paid.
Explanation:
The statement that best describes cash flow from financing activities is option 4: increase (or minus decrease) in stock, plus increase (or minus decrease) in debt, minus interest paid, minus dividends paid. Cash flow from financing activities refers to the cash that a company either raises or repays to finance its operations and capital. This includes transactions such as issuing or repurchasing equity, taking out or repaying loans, and paying dividends or interest to investors.
Some typical entries under the Cash Flows from Financing Activities section of a cash flow statement are net repayment of notes payable, repayments of long-term debt, proceeds from long-term debt, and interest and dividends that are restricted for reinvestment. The net change in cash and cash equivalents as a result of financing activities is also recorded, allowing stakeholders to see how financing impacts the company's cash position over a specific accounting period.
