Question

McFarlan Corporation is preparing a statement of cash flows using the indirect method, indicate below whether each item is an operating activity O, an Investing activity I, a Financing activity F, or a non cash transaction N.

1 The change in accounts payable during the period

2 Depreciation Expense

3 Exchange of stock for a building

4 Purchase of equipment

5 Purchase of treasury stock

6 Borrowing by signing a note payable

7 A gain on the sale of equipment

8 The change in Accounts Receivable during the period

9 Dividends paid

10 Income tax paid

Answer 1

1 The change in accounts payable during the period - O

2 Depreciation Expense - O

3 Exchange of stock for a building - N

4 Purchase of equipment - I

5 Purchase of treasury stock - F

6 Borrowing by signing a note payable - F

7 A gain on the sale of equipment - O

8 The change in Accounts Receivable during the period - O

9 Dividends paid - F

10 Income tax paid - O

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