E14-13 Classifying items on the indirect statement of cash flows

E14-13 Classifying items on the indirect statement of cash flows [5–10 min]

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.