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Correct classification of cash flows is critical to the accurate reporting of ca

ID: 2470613 • Letter: C

Question

Correct classification of cash flows is critical to the accurate reporting of cash flow information. Categorized cash flow information is more useful than a mere listing of cash flows in random order. In the table below, determine the cash flow classification which applies to each item by double clicking on the shaded box in the cash flow classification column and selecting one or more classifications. A particular classification may be used once, more than once, or not at all. Item Cash Flow Classification Payments to suppliers Interest payments Payments to retire bonds outstanding Down payment on purchase of equipment Obtain loan to purchase land to be held as an investment Purchase of treasury stock Depreciation expense Purchase of trading securities Monthly mortgage payment* Dividends received on investments Loss on disposal of equipment Proceeds from sale of securities available for sale Annual lease payment on capital lease* Payments to fund company pension plan Increase in accounts receivable for the period

Explanation / Answer

Item

Cash Flow Classification

Payments to suppliers

Cash flow from Operating activities

Interest payments

Cash flow from Financing activities

Payments to retire bonds outstanding

Cash flow from Financing activities

Down payment on purchase of equipment

Cash flow from Investing activities

Obtain loan to purchase land to be held as an investment

Cash flow from Financing activities

Purchase of treasury stock

Cash flow from Financing activities

Depreciation expense

Cash flow from Operating activities

Purchase of trading securities

Cash flow from Investing activities

Monthly mortgage payment*

Cash flow from Financing activities

Dividends received on investments

Cash flow from Investing activities

Loss on disposal of equipment

Cash flow from Investing activities

Proceeds from sale of securities available for sale

Cash flow from Investing activities

Annual lease payment on capital lease*

Cash flow from Investing activities

Payments to fund company pension plan

Cash flow from Operating activities

Increase in accounts receivable for the period

Cash flow from Operating activities

Item

Cash Flow Classification

Payments to suppliers

Cash flow from Operating activities

Interest payments

Cash flow from Financing activities

Payments to retire bonds outstanding

Cash flow from Financing activities

Down payment on purchase of equipment

Cash flow from Investing activities

Obtain loan to purchase land to be held as an investment

Cash flow from Financing activities

Purchase of treasury stock

Cash flow from Financing activities

Depreciation expense

Cash flow from Operating activities

Purchase of trading securities

Cash flow from Investing activities

Monthly mortgage payment*

Cash flow from Financing activities

Dividends received on investments

Cash flow from Investing activities

Loss on disposal of equipment

Cash flow from Investing activities

Proceeds from sale of securities available for sale

Cash flow from Investing activities

Annual lease payment on capital lease*

Cash flow from Investing activities

Payments to fund company pension plan

Cash flow from Operating activities

Increase in accounts receivable for the period

Cash flow from Operating activities