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Classifying items on the indirect statement of cash flows
The cash flow statement categorizes like transactions for optimal reporting.
• 1. Identify each of the following transactions as one of the following:
o • Operating activity (O)
o • Investing activity (I)
o • Financing activity (F)
o • Noncash investing and financing activity (NIF)
o • Transaction that is not reported on the statement of cash flows (N)
For each cash flow, indicate whether the item increases (+) or decreases (–) cash. The indirect method is used to report cash flows from operating activities.
• _____ a. Loss on sale of land.
• _____ b. Acquisition of equipment by issuance of note payable.
• _____ c. Payment of long-term debt.
• _____ d. Acquisition of building by issuance of common stock.
• _____ e. Increase in salary payable.
• _____ f. Decrease in inventory.
• _____ g. Increase in prepaid expenses.
• _____ h. Decrease in accrued liabilities.
• _____ i. Cash sale of land.
• _____ j. Issuance of long-term note payable to borrow cash.
• _____ k. Depreciation.
• _____ l. Purchase of treasury stock.
• _____ m. Issuance of common stock.
• _____ n. Increase in accounts payable.
• _____ o. Net income.
• _____ p. Payment of cash dividend.
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