The statement of cash flows classifies all cash inflows and outflows into one of

Question

The statement of cash flows classifies all cash inflows and outflows into one of three categories: Operating activities, Investing activities, Financing activities. In addition, certain transactions that do not involve cash are reported in the statement as noncash investing and financing activities. a. Operating activities b. Investing activities c. Financing activities d. Noncash investing and financing activities Required: For each of the following transactions, select the appropriate classification category Purchase of equipment for cash Payment of employee salaries. Collection of cash from customers. Cash proceeds from a note payable. Purchase of common stock of another corporation for cash. Issuance of common stock for cash. Sale of equipment for cash. Payment of interest on note payable Issuance of bonds payable in exchange for land and building Payment of cash dividends to shareholders Payment of principal on note payable. 2. 4. 5. 7 8. 9. 10

Explanation / Answer

Activity

Investing Activity

Purchase of Equipment for cash

Operating Activity

Payment of employees salaries

Operating Activity

Collection of cash from customers

Financing Activity

Cash proceeds from note payables

Investing Activity

Purchase of common stock of another corporation for cash

Financing Activity

Issuance of common stock for cash

Investing Activity

Sale of equipment for cash

Operating Activity

Payment of interest on notes payable

Noncash Investing and financing activity

Issuance of bonds in exchange for land and building

Financing Activity

Payment of cash dividends to shareholders

Financing Activity

Payment of principle on note payable.

Activity

Investing Activity

Purchase of Equipment for cash

Operating Activity

Payment of employees salaries

Operating Activity

Collection of cash from customers

Financing Activity

Cash proceeds from note payables

Investing Activity

Purchase of common stock of another corporation for cash

Financing Activity

Issuance of common stock for cash

Investing Activity

Sale of equipment for cash

Operating Activity

Payment of interest on notes payable

Noncash Investing and financing activity

Issuance of bonds in exchange for land and building

Financing Activity

Payment of cash dividends to shareholders

Financing Activity

Payment of principle on note payable.

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