1 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.

_____ a.          Loss on sale of land.

_____ b.          Acquisition of equipment by issuance of note payable.

_____ c.          Payment of long-term debt.

_____ d.          Acquisition of building by issuance of common stock.

_____ e.          Increase in salary payable.

_____ f.           Decrease in inventory.

_____ g.          Increase in prepaid expenses.

_____ h.          Decrease in accrued liabilities.

_____ i.           Cash sale of land.

_____ j.           Issuance of long-term note payable to borrow cash.

_____ k.          Depreciation.

_____ l.           Purchase of treasury stock.

_____ m.         Issuance of common stock.

_____ n.          Increase in accounts payable.

_____ o.          Net income.

_____ p.          Payment of cash dividend.