Classifications of Cash Flows. A company\'s statement of cash flows and the acco
ID: 2526643 • Letter: C
Question
Classifications of Cash Flows.
A company's statement of cash flows and the accompanying schedule of investing and financing activities not affecting cash may contain the following major sections:
Operating Activities
Investing Activities
Financing Activities
Investing and Financing Activities Not Affecting Cash
The following is a list of items that might appear on a company's statement of cash flows or in the accompanying schedule.
Required:
Using the letters A through D, indicate in which section of the statement of cash flows (or the accompanying schedule) the preceding items would most likely be classified. After each letter indicate with a plus (+) or a minus (-) whether the items would be reported as an increase (inflow) or decrease (outflow). If an item would not be reported in the statement (or the accompanying schedule), select X.
Decrease in accounts payable
Payment of dividends
Increase in income taxes payable
Proceeds from issuance of note
Payment for purchase of available-for-sale temporary investments
Amortization of premium on investment in bonds
Increase in prepaid expenses
Payment of note
Gain on sale of equipment
Proceeds from sale of land
Net income
Payment for acquisition of building
Depreciation expense
Issuance of common stock for land
Proceeds (principal) from collection of note
Amortization of discount on bonds payable
Decrease in deferred taxes payable
Proceeds from issuance of bonds
Issuance of stock dividend
Payment for purchase of treasury stock
Depletion expense
Increase in inventory
Conversion of preferred stock to common stock
Proceeds from issuance of stock
Lease of equipment under capital lease
Proceeds from sale of patent
Explanation / Answer
Activities Decrease in accounts payable opearting - Payment of dividends Financing - Increase in income taxes payable opearting + proceeds from issue of notes Financing + Payment for available for sale temporary investment Operating - Amortization of premium on investment in bonds X Increase in prepaid expense Operating - Payment of note Financing - Gain on sale of equipment X Proceeds from sale of land Investing + net income Operating + Payment for acquisition of building Investing - Depreciation expense X Issuance of common stock for land X Proceeds from collection of note Financing + Amortization of dicount on bonds payable X Decrease in deffered taxes payable Operating - Proceeds from issuance of bonds Financing + Issuance of stock dividend X Payment for purchase of treasury stock Financing - Depletion expense X Increase in inventory Operating - Conversion of preferred stock to common stock X Proceeds from issuance of stock Financing + Lease of equipment under capital lease X Proceeds from sale of patents Investing +