Classifying items on the indirect statement of cash flows [10 min]
Destiny Corporation is preparing its statement of cash flows by the indirect method. Destiny has the following items for you to consider in preparing the statement:
____a. Increase in accounts payable
____b. Payment of dividends
____c. Decrease in accrued liabilities
____d. Issuance of common stock
____e. Gain on sale of building
____f. Loss on sale of land
____g. Depreciation expense
____h. Increase in inventory
____i. Decrease in accounts receivable
____j. Purchase of equipment
Requirement
1. Identify each item as a(n)
• Operating activity—addition to net income (O+), or subtraction from net income (O-)
• Investing activity—addition to cash flow (I+), or subtraction from cash flow (I-)
• Financing activity—addition to cash flow (F+), or subtraction from cash flow (F-)
• Activity that is not used to prepare the indirect cash flow statement (N)
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