Determining Cash Flow Effects (P9-8)
For each of the following transactions, determine whether cash flows from operating activities will increase, decrease, or remain the same:
a. Purchased merchandise for cash.
b. Paid salaries and wages for the last month of the previous accounting period.
c. Paid taxes to the federal government.
d. Borrowed money from the bank. The term of the note is two years.
e. Withheld FICA taxes from employees’ paychecks and immediately paid to the government.
f. Recorded accrued interest expense.
g. Paid cash as the result of losing a lawsuit. A contingent liability associated with the liability had been recorded.
h. Paid salaries and wages for the current month in cash.
i. Performed services for a customer who had paid for them in the previous accounting period (i.e., deferred revenue is earned).
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