Question

Brooks Flooring is a national supplier of all types of flooring. Their biggest customer is Jenkins Construction Company. On July 8, 2016, Brooks Flooring purchased 100 shares of Jenkins stock. Later that year, on November 14, 2016, Brooks decided to sell 1,000 shares of Brooks stock to investors. What is the difference between these two transactions involving stock?

Answer 1

Answer:

The difference in these two transaction is that first is investing activity while the later is financing activity.

Explanation:

The first activity is purchasing 100 shares of Jenkins stock.

The purchasing of stocks are included in the investing activities.

The second activity is selling of the stocks, this is included in the financing activity

The financing activities are transactions with the investors which affects the equity

Hence,

The difference in these two transactions is that first is investing activity while the later is a financing activity.