medium · Principles of Finance financial-statements-markets-wc

Which of the following best describes the immediate impact on the three financial statements?

1. Cash from Financing Activities decreases by $50 million, Cash on the Balance Sheet decreases by $50 million, and Treasury Stock (a contra-equity account) increases by $50 million.
2. Cash from Operating Activities decreases by $50 million, since the purchase is capitalized as CapEx, and long-term fixed assets on the balance sheet decrease by $50 million.
3. Net Income on the Income Statement decreases by $50 million as a recognized expense, which flows through and reduces Retained Earnings and total equity on the Balance Sheet.
4. Cash from Financing Activities increases by $50 million, and Common Stock along with Additional Paid-in Capital on the Balance Sheet correspondingly increases by exactly $50 million.

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