Question

Assuming a statement of cash flows is prepared using the indirect method, indicate the reporting of the transactions and events listed below by major categories on the statement. Use the following code letters to indicate the appropriate category under which the item would appear on the statement of cash flows.

A Add to Operating activities

B Deduct from Operating activities

C   Add to Cash flows from Investing activities

D   Deduct from Cash flows from Investing activities

E. Add to Cash flows from Financing activities

F. Deduct from Cash flows from Financing activities

G. Not shown on the Cash Flow Statement

Decrease in Accounts Receivable	Answer 1Choose...EGBDCFA
Purchased Equipment by issuing a long term note payable.	Answer 2Choose...EGBDCFA
Loss on sale of investments	Answer 3Choose...EGBDCFA
Land is sold for cash at an amount equal to book value	Answer 4Choose...EGBDCFA
Depreciation expense recorded for the period	Answer 5Choose...EGBDCFA
Increase in prepaid expenses	Answer 6Choose...EGBDCFA
Gain on the sale of equipment	Answer 7Choose...EGBDCFA
Proceeds from the sale of investments	Answer 8Choose...EGBDCFA
Accounts payable decreased during the period	Answer 9Choose...EGBDCFA
Bonds Payable were acquired and retired at their carrying value	Answer 10Choose...EGBDCFA
Decrease in taxes payable	Answer 11Choose...EGBDCFA
Common stock is issued for cash at an amount above par value	Answer 12Choose...EGBDCFA
Treasury stock was acquired for cash	Answer 13Choose...EGBDCFA
Increase in interest receivable	Answer 14Choose...EGBDCFA
Dividends paid during the year.	Answer 15Choose...EGBDCFA
Building was purchased for cash	Answer 16Choose...EGBDCFA
Increase in Dividends receivable on investments.	Answer 17Choose...EGBDCFA
Merchandise inventory increased during the period

Answer 1

TRANSACTIONS	ANSWER
Decrease in Accounts Receivable	A Add to Operating activities
Purchased Equipment by issuing a long term note payable.	G. Not shown on the Cash Flow Statement
Loss on sale of investments	A Add to Operating activities
Land is sold for cash at an amount equal to book value	C   Add to Cash flows from Investing activities
Depreciation expense recorded for the period	A Add to Operating activities
Increase in prepaid expenses	B Deduct from Operating activities
Gain on the sale of equipment	B Deduct from Operating activities
Proceeds from the sale of investments	C   Add to Cash flows from Investing activities
Accounts payable decreased during the period	B Deduct from Operating activities
Bonds Payable were acquired and retired at their carrying value	E. Add to Cash flows from Financing activities
Decrease in taxes payable	B Deduct from Operating activities
Common stock is issued for cash at an amount above par value	E. Add to Cash flows from Financing activities
Treasury stock was acquired for cash	F. Deduct from Cash flows from Financing activities
Increase in interest receivable	B Deduct from Operating activities
Dividends paid during the year.	F. Deduct from Cash flows from Financing activities
Building was purchased for cash	D   Deduct from Cash flows from Investing activities
Increase in Dividends receivable on investments.	B Deduct from Operating activities
Merchandise inventory increased during the period	B Deduct from Operating activities