Question

Consider the following transactions:________. a. Purchased equipment for $130,000 cash. b. issued S14 par preferred stock for cash. c. Cash received from sales to customers of 535,000. d. Cash paid to vendors, 517,000. e. Sold building for $19,000 gain for cash. f. Purchased common treasury shares for 528,000. g. Paid a notes payable with 1,250 of the company's common shares. Requirement Identify the category of the statement of cash flows in which each transaction would be reported.

Answer 1

Answer:

a. Investing Activities

b. Financing Activities

c. Operating Activities

d. Operating Activities

e. Investing Activities

f.  Financing Activities

g. Non - Cash Financing Activities

Explanation:

The Cash Flow Statement is Prepared under the Following Categories :

1. Operating Activities

Reports the cash flows from the ordinary course of business. Example is cash collection from customers.

2. Investing Activities

Reports the cash flow from sale or acquisition of assets. Example is the sale of the Building.

3. Financing Activities

Reports the cash raised by issuing financial instruments and the repayment there-off. Example is the issue of Preference Shares for Cash.

Non - Cash Items

These are not reported in the Cash flow statement because they do not include movement of cash.