Question

Question:

The statement of cash flows classifies all cash inflows and outflows into one of the three categories shown below and lettered from a through c. In addition, certain transactions that do not involve cash are reported in the statement as noncash investing and financing activities, labeled d.

a. Operating activities
b. Investing activities
c. Financing activities
d. Noncash investing and financing activities

Required:
For each of the following transactions, use the letters above to indicate the appropriate classification category.
1. ____Purchase of equipment for cash.
2. ____Payment of employee salaries.
3. ____Collection of cash from customers.
4. ____Cash proceeds from a note payable.
5. ____Purchase of common stock
 of another corporation for cash.
6. ____Issuance of common stock for cash.
7. ____Sale of machinery for cash.
8. ____Payment of interest on note payable.
9. ____Issuance of bonds payable in exchange for land and building.
10. ____Payment of cash dividends to shareholders.
11. ____Payment of principal on note payable.

Answer 1

1.         b _     Purchase of equipment for cash.

   2.         a _     Payment of employee salaries.

   3.         a _     Collection of cash from customers.

   4.         c _     Cash proceeds from a note payable.

   5.         b _     Purchase of common stock of another corporation for cash.

   6.         c _     Issuance of common stock for cash.

   7.         b _     Sale of machinery for cash.

   8.         a _     Payment of interest on note payable.

   9.         d _     Issuance of bonds payable in exchange for land and building.

10.         c _     Payment of cash dividends to shareholders.

11.         c _     Payment of principal on note payable.

  b _     Purchase of equipment for cash.