For each of the items below, indicate whether it is (1) a cash flow from an...
For each of the items below, indicate whether it is (1) a cash flow from an operating activity, (2) a cash flow from an investing activity, (3) a cash flow from a financing activity, (4) a noncash investing and financing activity, or (5) none of the above.
| a. Paid cash to retire bonds payable at a loss. | |
| b. Received cash as settlement of a lawsuit. | |
| c. Acquired a patent in exchange for common stock. | |
| d. Received advance payments from customers on orders for custom-made goods. | |
| e. Gave large cash contribution to local university. | |
| f. Invested cash in 60-day commercial paper (a cash equivalent). |
Homework Answers
(a) Paid cash to retire bonds payabke at a loss: Cash flow from financing activity.
(b) Received cash as settlement of a lawsuit: Cash flows from operating activities.
(c) Since no cash is involved in acquiring patent, so it will be a non cash investing and financing activity.
(d) Receiving advance payment for orders: Cash flows from operating activity.
(e) Cash contributions to local university: Cash flow from investing activity
(f) Investing cash in 60 day commercial paper (a cash equivalent) is considered as a cash equivalent and do not come into any of the given activity.
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