On January 1, 20X7, Clyde County issued $100 million of 5%, 20-year bonds at 102. Interest is payable semiannually. The proceeds were restricted for the construction of a new county water purification plant for its Water Enterprise Fund.

How would the Enterprise Fund’s statement of cash flows be affected by the debt issuance?

a. Cash flows from operating activities would increase.

b. Cash flows from noncapital financing activities would increase because bond proceeds have not yet been spent for capital purposes.

c. Cash flows from capital financing activities would increase.

d. Cash flows from investing activities would increase.