Question

The major classifications of activities reported in the statement of cash flows are operating, investing, and financing. Classify each of the transactions listed below as: 1. Operating activity—add to net income. 2. Operating activity—deduct from net income. 3. Investing activity. 4. Financing activity. 5. Reported as significant noncash activity. The transactions are as follows. a. Issuance of common stock. b. Purchase of land and building. c. Redemption of bonds. d. Sale of equipment. e. Depreciation of machinery. f. Amortization of patent. g. Issuance of bonds for plant assets. h. Payment of cash dividends. i. Exchange of furniture for office equipment. j. Purchase of treasury stock. k. Loss on sale of equipment. l. Increase in accounts receivable during the year. m. Decrease in accounts payable during the year.

Answer 1

Answer:

A. Financing activity

B. Investing activity

C. Financing activity

D. Investing activity

E. Operating activity—add to net income

F. Operating activity—add to net income

G. Reported as significant noncash activity

H. Financing activity

I. Reported as significant noncash activity

J. Financing activity

K. Operating activity—add to net income

L. Operating activity—deduct from net income

M. Operating activity—deduct from net income

Explanation: