Given the following cash transactions, classify each as a cash flow from (1 oper

Question

Given the following cash transactions, classify each as a cash flow from (1 operating activities, (2) investing activities, or (3) financing activities. a. Payment to employees for work done b. Dividends paid to shareholders c. Payment for new equipment d. Payment to supplier for inventory e. Interest payment to the bank related to a loan Classify the following cash flow transactions as an operating activity, an financing activity, or a financing activity. Transaction Classification Payment to employees for work done Dividends paid to shareholders Payment for new equipment Payment to supplier for inventory Interest payment to the bank related to a loarn

Explanation / Answer

The difference between direct and indirect method applies only to the operating actvities section of the statement of cash flows.

Transaction Classification Payment to employees for work done Operating activity Dividends paid to shareholders Financing activity Payment for new equipment Investing activity Payment to supplier for inventory Operating activity Interest payment to bank related to a loan Financing activity

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