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Statement of Cash Flows - reporting of the transactions

Assuming a statement of cash flows is prepared, indicate the reporting of the transactions and events listed below by major categories on the statement. Use the following code letters to indicate the appropriate category under which the item would appear on the statement of cash flows.


Cash Flows From Operating Activities

Add to Net Income A

Deduct from Net Income D

Cash Flows From Investing Activities IA

Cash Flows From Financing Activities FA


1. Common stock is issued for cash at an amount above par value _______

2. Merchandise inventory increased during the period. _______

3. Depreciation expense recorded for the period. _______

4. Building was purchased for cash. _______

5. Bonds payable were acquired and retired at their carrying value. _______

6. Accounts payable decreased during the period. _______

7. Prepaid expenses decreased during the period. _______

8. Treasury stock was acquired for cash. _______

9. Land is sold for cash at an amount equal to book value. _______

10. Patent amortization expense recorded for a period. _______

Solution Preview

Hi there,

Here are your answers:

1. FA
2. D
3. IA
4. IA
5. FA
6. D
7. A
8. FA
9. IA
10. IA

Also, some background information for you regarding the cash flow statement for your reference:

# Net cash flow from operating activities: Operating activities are the daily internal activities of a business that either require ...