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Transactions by type of activity for statement of cash flows

1. An analysis of comparative balance sheets, the current year's income statement and the general ledger accounts of Kingley Corp. uncovered the following items. Assume all items involve cash unless there is information to the contrary:

A. Conversion of bonds into common stock
B. Receipt of interest on notes receivable,
C. Issuance of capital stock
D. Amortization of patent
E. Issuance of bonds for land

Instructions:

Indicate how each item should be classified in the statement of cash flows using these four major classifications: operating activity (indirect method), investing activity, financing activity, and significant noncash investing and financing activity.

Solution Preview

1. An analysis of comparative balance sheets, the current year's income statement and the general ledger accounts of Kingley Corp. uncovered the following items. Assume all items involve cash unless there is information to the contrary:

The cash flow statement is intended to provide information on a firm's liquidity or solvency. The cash flow provides a clear understanding of a company's financial resources at a given point in time. ...

Solution Summary

Response discusses transactions by type of activity for statement of cash flows, indicating how different items should be classified in a cash flows statement.

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