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Classification for statement of cash flows

Statement of cash flows

For each event listed below, select the appropriate category which describes the effect of the event on the statement of cash flows

a) Cash provided/ used by operating activities
b) cash provided/ used by investing activities
c) cash provided/ used by financing activities
d) not a cash flow

1) Payment on long term debt
2) Issuance of bonds at the premium
3) Collection of accounts receivable
4) Cash dividends declared
5) Issuance of stock at acquire land
6) Sale of available- for -sale securities ( long term)
7) Payment of employees wages
8) Issuance of common stock for cash
9) Payment of income tax
10) purchase of equipment
11) Purchase of treasury stock(common)
12) Sale of real estate held as long term investment

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Solution Preview

The rule:

Investing: buy/sell long term asset or buy/sell securities
Financing: get/repay debt, transaction with owners
Operating: all else! transactions with customers, vendors, employee, government

Non-cash: disclose only

Using this ...

Solution Summary

The response gives you the "rule" that helps you know what goes in each category and then guides you using this rule to the solution.