Question

A statement of Cash Flows contains the following sections: Cash Flows from Operating Activities Cash Flows from Investing Activities Cash Flows from Financing Activities Investing and Financing Activities NOT affecting cash A list of items that appear on the Cash Flows Statement appear below: Using the letters (A-D), indicate in which section(s) of the statement of cash flows (or accompanying schedule) the preceding items would most likely be classified A Investing and Financing Activities NOT affecting cash B. Cash Flows from Investing Activities Depreciation Expense Decrease in accounts payable conversion of bonds to common stock Payment of dividends declared last fiscal year C. Cash Flows from Financing Activities ー Proceeds from issuance of short-term note payable, D. Net cash fows from operating activities NOT relating to operating activities Payment for purchase of a building Bond Premium amortization under the effective interest method Issuance of common stock to convert bonds payabl

Answer 1

Ans. The answers for the respective given items are as under:-

Depreciation expense = As there is no cash involve in depreciation so it will come under investing and financing activities not affecting cash

Decrease in accounts payable = As cash is going for operating activities so it will fall under cash flows from operating activities

Conversion of bonds to common stock = As there is no cash involve under this conversion so it will fall under investing and financing activities not affecting cash

Payments of dividends = It will fall under cash flows from financing activities because cash is paid by company to shareholders in this case

Proceeds from issuance of short term notes payable not relating to operating activities = It will fall under financing activities because cash has been received through notes payables

Payment for purchase of building = Purchasing building is an investing activity so it will fall under investing activity

Bonds premium amortization under the effective interest method = No cash involve under this so it will come under investing and financing activities not affecting cash

Issuance of common stock to convert bonds payable = No cash involve under this so it will come under investing and financing activities not affecting cash