What type of financial activity includes the issuance of preferred stock?

The issuance of preferred stock is classified as a financing activity because financing activities involve transactions that affect a company's capital structure, primarily through obtaining funds. When a company issues preferred stock, it is raising capital by attracting investors who exchange their money for equity in the form of preferred shares. This not only impacts the funds available for the company's operations and investments but also reflects decisions made regarding how to finance the business. Financing activities include obtaining funds through various means, such as issuing common or preferred stock, borrowing funds, or repaying debts.

In contrast, investing activities relate to the acquisition and disposal of long-term assets and investments, while operating activities involve the primary revenue-generating activities of the business, such as sales and service delivery. Non-operating activities refer to transactions outside the core business operations, which might include income from investments or sales of assets not regularly exchanged in the company's operations. Thus, the issuance of preferred stock clearly aligns with financing activities as it directly involves raising capital for the business.