Question

Selected data from various accounts during a fiscal year are presented below. By the use of x’s, indicate whether each of the items will be (1) added to or (2) deducted from net income in arriving at cash flows from operating activities as reported on the statement of cash flows using the indirect method.

Cash Flows from Operating Activities Added Deducted to Net from Net Not Income Income Reported 0. Stock dividends declared 1. Amortization of bond discount. 2. Building and land purchased by issuing common stock ...... 3. Decrease in prepaid expenses 4. Depreciation expense on equipment ... 5. Decrease in dividends payable 6. Common stock issued for cash .................. 7. Decrease in inventories ......... 8. Decrease in accounts payable 9. Gain on sale of land .... 10. Amortization expense on patents... 11. Gain on sale of long-term investments 12. Increase in accounts receivable. .......

Answer 1

Classification

		Cash flow from operating activities
		Added to net income	Deducted from net income	Not reported
0	stock dividend declared			X
1	Amortization of bond discount	X
2	Building and land purchased by issuing common Stock			X
3	Decrease in prepaid expense	X
4	Depreciation expense on equipment	X
5	Decrease in dividend payable			X
6	Common Stock issued for cash			X
7	Decrease in inventories	X
8	Decrease in account payable		X
9	gain on sale of land		X
10	Amortization expense on patents	X
11	Gain on sale of long term investments		X
12	Increase in account receivable		X