Question

Buy-back of shares is an extraordinary item for ______.

Options

• Operating Activities

• Investing Activities

• Financing Activities

• Cash and Cash Equivalents

Answer 1

Buy-back of shares is an extraordinary item for Financing Activities.

Explanation:

Buy-back of shares relates directly to the capital structure of a company, as it involves a company repurchasing its own equity shares from the market to reduce its equity capital. Any transaction that alters the size and composition of a company’s equity capital or borrowings is classified under financing activities. Since a buy-back is an uncommon, major financial restructuring event, it is treated as an extraordinary item within that category.