How does a $10 increase in debt typically affect the cash flow statement?

When a company takes on an additional $10 in debt, it typically results in an increase in cash flow on the cash flow statement. This is because borrowed funds are considered a cash inflow. When the company receives this debt, it raises cash that can be utilized for various purposes such as investment, operating expenses, or paying off other obligations.

This increase in cash is reflected in the financing activities section of the cash flow statement. Specifically, the cash inflow from the new debt would show as a positive change, resulting in an overall increase in cash by the amount borrowed, which is $10 in this scenario.

In contrast, other choices might suggest that there is no effect on cash or that cash decreases, which would not align with accounting principles regarding how cash movements are recorded in relation to debt.