Question

Identify whether each of the following would be reported as an operating, investing, or financing activity on the statement of cash flows: a. Retirement of bonds payable b. Purchase of inventory for cash c. Cash sales d. Repurchase of common stock e. Payment of accounts payable f. Disposal of equipment

Answer 1

Answer:

a. Retirement of bonds payable  =  financing activity

b. Purchase of inventory for cash  = operating activity

c. Cash sales = operating activity

d. Repurchase of common stock  = financing activity

e. Payment of accounts payable  = operating activity

f. Disposal of equipment = investing activity

Explanation:

Operating Activities are Activities relating to trading in the normal course of business.

Investing Activities are Activities relating to movement in capital expenditure items.

Financing Activities are Activities relating to movement in Interest of company owners and providers of finance.