Question

on- The major classifications of activities reported in the statement of cash flows are operating, investing, and financing. Classify each of the transactions listed below as: 1. Operating activity-add to net income. 2. Operating activity-deduct from net income. port 3. Investing activity. 4. Financing activity. 5. Reported as significant noncash activity The transactions are as follows. Transactions Classifications of Activities Issuance of common stock (b) Purchase of land and building Redemption of bonds. (d) Sale of equipment. le) Depreciation of machinery Amortization of patent. (g) Issuance of bonds for plant assets. th) Payment of cash dividends.

Answer 1

ь 1 . Operating activity; add to the net income 2. Operating activity : deduct from net income 3. Investing activity 4. Financing activity 5. Reported as significant noncash activity Classification Transaction of activities Issuance of common stock | Purchase of land and building Redemption of bonds sale of Equipment Depreciation of equipment Amortization of patent Issuance of bonds for plant assets payment of cash dividend Exchange of furniture for office equipment Purchase of treasury stock loss on sale of equipment Increase in accounts receivables during the year Decrease in accounts payable during the year d h j k m

explanation operating activities includes the sales, cost of goods sold , selling and administration expenses, noncash activities of changes in current assets and current liabilities financing activities includes the issuance of common stock purchase of treasury stock and cash dicidends etc investing activities includes purchase of asset and sales of assets noncash activities are exchange based transactions which do not involve cash payment or cash received