Classifying items on the indirect statement of cash flows The cash flow statement categorizes like transactions for optimal reporting.
Requirement
1. Identify each of the following transactions as one of the following:
- Operating activity (O)
- Investing activity (I)
- Financing activity (F)
- Noncash investing and financing activity (NIF)
- Transaction that is not reported on the statement of cash flows (N)
For each cash flow, indicate whether the item increases (+) or decreases (-) cash.
The indirect method is used to report cash flows from operating activities.
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a. Loss on sale of land.
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i. Cash sale of land.
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b. Acquisition of equipment
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j. Issuance of long-term note
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by issuance of note payable.
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payable to borrow cash.
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c. Payment of long-term debt.
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k. Depreciation.
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d. Acquisition of building by
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l. Purchase of treasury stock.
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issuance of common stock.
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e. Increase in salary payable.
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m. Issuance of common stock.
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f. Decrease in inventory.
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n. Increase in accounts payable.
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g. Increase in prepaid expenses.
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o. Net income.
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h. Decrease in accrued liabilities.
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p. Payment of cash dividend.
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