LO3 Brief Exercise 12-3 Three Types of Activities EXAMPLE 12-1 For each of the f
ID: 2630863 • Letter: L
Question
LO3 Brief Exercise 12-3 Three Types of Activities EXAMPLE 12-1 For each of the following transactions on the statement cash follows, indicate whether it would appear in the Operating Activities section (O), in the Investing Activities section (I), or in the Financing Activities section (F). Assume the use of the direct method in the Operating Activities section. 1. Repayment of long-term debt 2. Purchase of equipment 3. Collection of customer's account 4. Issuance of common stock 5. Purchase of another company 6. Payment of dividends 7. Payment of income taxes 8. Sale of equipmentExplanation / Answer
1. Financing
2. Investing
3. Operating
4. Financing
5. Investing
6. Financing
7. Operating
8. Investing
Operating involves all regular operatings. Investing involves the purchases of investments, property, plant, and equipment and their subsequent sale. Financing activities involve getting money to finance opertions of the company, as well as paying disctributions to shareholders in the form of dividends or purchase of treasury stock.
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