Question

PART A

Indicate whether each of the following items should be classified as an operating, investing, or financing activity on the statement of cash flows. If an item does not belong on the statement, indicate as "NA" (Not applicable).

a.	Declaration of dividends on common shares, to be paid later
b.	Payment of dividends on common shares
c.	Purchase of equipment
d.	Receipt of cash from the sale of a warehouse
e.	Receipt of cash through a long-term bank loan
f.	Interest payments on a long-term bank loan
g.	Acquisition of land for cash
h.	Investment in another company by purchasing some of its shares
i.	Net decrease in accounts payable

PART B

Classify each of the following transactions as increasing, decreasing, or having no effect on cash flows:

a.	Prepaying rent for the month
b.	Accruing the wages owed to employees at the end of the month, to be paid on the first payday of the next month
c.	Selling bonds to investors
d.	Buying the company’s own shares on the stock market
e.	Selling merchandise to a customer who uses a debit card to pay for the purchase
f.	Paying for inventory purchased earlier on account
g.	Buying new equipment for cash
h.	Selling surplus equipment at a loss
i.	Paying the interest owed on a bank loan
j.	Paying the income taxes owed for the year

Answer 1