Explore BrainMass

Explore BrainMass

    Identifying a Transaction by Cash Flow Category

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    Identify whether each transaction below is an operating, investing or financing activity. Assume the indirect method.

    A. Purchase of plant seeds.
    B. Increase in accounts payable.
    C. Decrease in accounts receivable.
    D. Payment of long-term loan
    E. Net income
    F. Depreciation expense.
    G. Payment of dividends.
    H. Issuing stock
    I. Increase in investing.
    J. Decrease in taxes payable

    © BrainMass Inc. brainmass.com June 4, 2020, 3:32 am ad1c9bdddf
    https://brainmass.com/business/accounting/identifying-transaction-cash-flow-category-520790

    Solution Preview

    A. Purchase of plant seeds: Because plant seeds are inventory items, the purchase is an Operating activity. O
    B. Increase in accounts payable: Because accounts payable are usually used to pay vendors, its increase is an Operating activity. O
    C. Decrease in accounts receivable: Because accounts receivable is amounts due from customers, ...

    Solution Summary

    This solution discusses how certain transactions are classified on a statement of cash flows and why they are classified that way.

    $2.19

    ADVERTISEMENT