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Classification for statement of cash flows

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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.

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See Also This Related BrainMass Solution

Statement of Cash Flows: classification of and impact of various types of transactions.

(Statement of Cash Flows-Classifications) The major classifications of activities reported in the statement of cash flows are operating, investing, and financing. Classify each of the transactions listed blow as:
1. Operating activity-add to net income
2. operating activity-deduct from net income
3. investing activity
4. financing activity
5. reported as significant noncash activity

The transactions are as follows

a. Issuance of capital stock
b. Purchase of land and building
c. Redemption of bonds
d. Sale of equipment
e. Depreciation of machinery
f. Amortization of patent
g. Issuance of bonds for plant assets
h. Payment of cash dividends
i. Exchange of furniture for office equipment
j. Purchase of treasury stock
k. Loss on sale of equipment
l. Increase in accounts receivable during the year
m. Decrease in accounts payable during the year

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