Question

Cash Flow Activity 1. Sold stock investments for cash. 2. Received cash payments from customers. 3. Paid cash for wages and salaries. 4. Purchased inventories with cash. 5. Paid cash dividends. 6. Issued common stock for cash. 7. Received cash interest on a note. 8. Paid cash interest on outstanding notes. 9. Received cash from sale of land. 10. Paid cash for property taxes on building.

Answer 1

Answer:

Question is to classify each entry as either operating, investing, or financing activities assuming the indirect method.

Operating activities are those that involve the company's day to day activities of selling their goods and services.

Investing activities refer to those that involve the company buying or selling fixed assets or the securities of other companies.

Financing activities are those that have to do with Equity and long term debt which means that dividends fall here.

1. Sold stock investments for cash. ⇒ INVESTING

2. Received cash payments from customers. ⇒ OPERATING

3. Paid cash for wages and salaries. ⇒ OPERATING

4. Purchased inventories with cash.⇒ OPERATING

5. Paid cash dividends. FINANCING

6. Issued common stock for cash. ⇒ FINANCING

7. Received cash interest on a note. ⇒ OPERATING

8. Paid cash interest on outstanding notes. ⇒ OPERATING

9. Received cash from sale of land. ⇒ INVESTING

10. Paid cash for property taxes on building. ⇒ OPERATING