Answer:
Explanation:
Basically there are three types of activities under the indirect method is shown below:
1. Operating activities: It includes those transactions which affect the working capital, and it records gain or loss on sale of the assets. Increase in current assets and decrease in current liabilities would be subtracted and the decrease in current assets and increase in current liabilities would be added
2. Investing activities: It records those activities which include purchase and sale of the fixed assets
3. Financing activities: It records those activities which affect the long term liability and shareholder equity balance.
So, the item categorization under each activities are shown below:
a. Cash sale of land - Investing activity (I) (+)
b. Issuance of long-term note payable in exchange for cash - Financing activity (F) (+)
c. Depreciation of equipment - Operating activity (O) (+)
d. Purchase of treasury stock - Financing activity (F) (-)
e. Issuance of common stock for cash - Financing activity (F) (+)
f. Increase in accounts payable -
Operating activity (O) (+)
g. Net income - Operating activity (O) (+)
h. Payment of cash dividend - Financing activity (F) (-)
i. Decrease in accrued liabilities - Operating activity (O) (-)
j. Loss on sale of land - Operating activity (O) (+)
k. Acquisition of building by issuance of notes payable - Non-cash investing and financing activity (NIF) as no cash transactions involves
l. Payment of long-term debt - Financing activity (F) (-)
m. Acquisition of building by issuance of common stock - Non-cash investing and financing activity (NIF) as no cash transactions involves
n. Decrease in accounts receivable - Operating activity (O) (+)
o. Decrease in inventory - Operating activity (O) (+)
p. Increase in prepaid expenses - Operating activity (O) (-)
