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For each of the following transactions, indicate whether the cash flow is an operating, investing, or financing activity for

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Answer #1

Classification

1 A company pays salaries to employees Operating activity-outflow of Cash
2 A company receives cash for services it will perform in the future Operating activity-inflow of Cash
3 A company pays back the principal on a bank loan evidenced by a promissory note Financing activity-outflow of cash
4 A company sells equipment previously used in its business for cash Investing activities-inflow of cash
5 A company makes a cash purchase of equipment to be used in its business Investing activities-Outflow of cash
6 A company pays a cash dividend to its stockholders Financing activities-Outflow of Cash
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