Question

waccamaw, inc. owed one of its creditors $250,000, but it did not have enough cash to repay the debt. following lengthy negotiations, the parties agreed that waccamaw, inc. would issue 50,000 shares of common stock to settle the debt. on the statement of cash flows, this transaction is shown in the ______

a. non - cash investing and financing activities section
b. investing activities section
c. financing activities section
d. operating activities section

Explanation:

Financing activities involve obtaining capital (like issuing stock) to settle debts. Issuing common stock to settle a debt is a financing - related transaction. Non - cash investing and financing activities are for transactions with no cash flow, but here the issuance of stock to settle debt is a financing activity (as issuing stock is a financing source). Investing activities are about long - term assets, and operating activities are about day - to - day operations, so this fits financing activities.

Answer:

C. financing activities section