Answer:
Explanation:
There are three types of activities in the cash flow statement which are described below:
1. Operating activities: It includes those transactions which affect the working capital after net income. The increase in current assets and a decrease in current liabilities would be deducted whereas the decrease in current assets and an increase in current liabilities would be added.
These changes in working capital would be adjusted. Moreover, the depreciation expense is added to the net income and it also records the cash receipts and cash payment transactions
2. Investing activities: It records those activities which include purchase and sale of the long term assets. The purchase is an outflow of cash whereas sale is an inflow of cash
3. Financing activities: It records those activities which affect the long term liability and shareholder equity balance. The issue of shares is an inflow of cash whereas redemption and dividend is an outflow of cash.
The categorization is shown below:
a. Cash purchase of merchandise inventory - operating activity
b. Cash payment of dividend - financing activity
c. Cash receipt from the collection of long-term notes receivable - investing activity
d. Cash payment for income taxes - operating activity
e. Purchase of equipment in exchange for notes payable - non cash activity
f. Cash receipt from the sale of land - investing activity
g. Cash received from borrowing money - financing activity
h. Cash receipt for interest income - operating activity
i. Cash receipt from the issuance of common stock - financing activity
j. Cash payment of salaries dividends - operating activity
