Each of the items found below might appear on astatement of cash flow. Statement

Question

Each of the items found below might appear on astatement of cash flow.

                                           Statementsection          StatementFormat         Add orSubtracted?

1.      Decrease in taxes payable

2.      Cash paid to suppliers or inventory

3.      Dividends declared and paid

4.      Depreciation expense

5.      Sale of stock

6.      Increase in accounts receivable

7.      Cash collected from customers

8.      Purchase of plant assets

9.      Payments on long-term dept

10.    Cash paid fortaxes

11.    Increase in wagespayable

12.    Purchase oftreasury stock

For each item, indicate answers as shown.

a.      Would it appear on the statement of cash flows under theoperating activities (O), investing activities(I), or financing activities (F)section?

b.      Would it appear in the direct format (D), indirectformat (I), or both formats (B)?

c.       Would it appear in the (+) or subtracted (-) in computingcash flow?

Explanation / Answer

Number StatementSection StatementFormat Add or subtract? 1 Decrease in Taxes Payable I Add 2 Cash paid to suppliers of inventory B Subtract 3 Dividends declared and paid B Subtract 4 Depreciation Expense I Add 5 Sale of Stock B Add 6 Increase in Accounts Receivable B Subtract 7 cash Collected from customers B Add 8 Purchase of plant assets B Subtract 9 Payments on long term debt B Subtract 10 Cash Paid for Taxes B Subtract 11 Increase in Wages Payable I Add Purchase of treasury Stock B Subtract

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