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