Classification of Cash Flows The following are several transactions and events t
ID: 2526639 • Letter: C
Question
Classification of Cash Flows The following are several transactions and events that might be disclosed on a company's statement of cash flows: Required: 1. Identify in which section (if any) of the statement of cash flows each of the preceding items would appear and indicate whether it would be an inflow (addition) or outflow (subtraction). a. issuance of common stock b. purchase of building c. net income d. increase in accounts receivable e. depreciation expense f. sale of land at cost g. conversion of bonds to common stock h. increase in accounts payable i. payment of cash dividends j. issuance of a stock dividend 2. Under IFRS, how may the payment of cash dividends be classified? As a net cash inflow from operating activities. As a net cash outflow from investing activities. As a net cash inflow from investing activities or operating activities. As a net cash outflow from financing activities or operating activities
Explanation / Answer
Solution 1:
Solution 2:
Under IFRS, payment of cash dividends can be classified as a net cash outflow from financing activities or operating activities.
Classification of transaction in Cash Flow statement S. No Transaction Section of Cash flow statement Inflow / Outflow a issuance of common stock Cash flow from financing activities Inflow b purchase of building Cash flow from Investing activities Outflow c net income Cash flow from Operating activities Inflow d increase in accounts receivable Cash flow from Operating activities Outflow e depreciation expense Cash flow from Operating activities Inflow f sale of land at cost Cash flow from Investing activities Inflow g conversion of bonds to common stock Non-Cash Investing and Financing Activities NA h increase in accounts payable Cash flow from Operating activities Inflow i payment of cash dividends Cash flow from financing activities Outflow j issuance of a stock dividend Non-Cash Investing and Financing Activities NA