Question

The statement of cash flows classifies all cash inflows and outflows into one of the three categories:

A. Operating activities,
B. Investing activities,
C. Financing activities.

In addition, certain transactions that do not involve cash are reported in the statement as noncash investing and financing activities. Required: For each of the following transactions, select the appropriate classification category

1. _____ Purchase of equipment in exchange for a note payable.2. _____ Payment of rent.3. _____ Collection of cash from customers.4. _____ Payment of interest on debt.5. _____ Purchase of a bond of another company.6. _____ Issuance of common stock for cash.7. _____ Sale of land for cash8. _____ Receipt of interest on a note receivable.9. _____ Receipt of principal on a note receivable.10. _____ Payment of cash dividends to shareholders.

Answer 1

Answer:

1. Noncash investing and financing activities

2. A. Operating activities,

3. A. Operating activities,

4. C. Financing activities.

5. B. Investing activities,

6. C. Financing activities.

7. B. Investing activities,

8. B. Investing activities,

9. B. Investing activities,

10. C. Financing activities

Explanation:

All cash flows forthe operation of the company relates to the Cash flows from operating activites.

All the cashflows corresponding to the fixed asset are reffered as Cash flows from investing activites.

All the cash flows made for the funding of the company are known as Cash flows from Financing activites