Question

Where would these go on the Statement of Cash Flows?

1. Purchase of treasury stock	A. Operating
2. Sale of long term investments at cost	B. Financing
3. Purchased building by taking out a mortgage.	C. Investing
4. Converted bonds payable to stock	D. Non-cash

Answer 1

cash flow statement records change in cash during a given period by bifurcating cash flow into three parts (1) cash fow from operating activities (2) cash flow from investing activities 3)cash flow from financing activities

. 1purchase of treasury stock

it decreases stockholder's equity.Changes in stockholder's activity and long term liabilities are recorded in financing activities section of cash flow.

It will decrease the cash from financing activities

Answer B)

2.sale of long term investment

cash flow from investing activities records inflow and outflow of cash from selling or purchasing long term investments. The cash spent or recieved will give long term benefit.

purchase/sale of fixed assets or long term investments are non current activities . they will be recorded under cash flow from investing activities

Answer C)

3/4Purchase of building by mortgage and converted bonds payable to common stock

There transactions will not result into increase or decrease of cash.

Building purchased by providing mortgage without any down payment will not involve cash

In the same way bonds converted to common stock will just result into stock conversion without any cash involvement

however this transactions are significant enough for users to know, so they are recorded separately under non cash investing and financing activities under cash flow statement

Answer D)

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