1. Identify whether each transaction below is an operating, investing or financi

Question

1. Identify whether each transaction below is an operating, investing or financing activity. Assume the indirect method. Identify the letter and put O (Operating), I (Investing) or F (Financing) after it so for example: a. O (this is just an example, not necessarily the answer)
a. Purchase of plant assets
b. Increase in accounts payable
c. Decrease in accounts receivable
d. Payment of long-term loan
e. Net income
f. Deprecation expense
g. Payment of dividends
h. Issuing stock
i. Increase in inventory
j. Decrease in taxes payable

Explanation / Answer

a. Purchase of plant assets - I b. Increase in accounts payable - O c. Decrease in accounts receivable - O d. Payment of long-term loan - F e. Net income - O f. Deprecation expense - O g. Payment of dividends - F h. Issuing stock - F i. Increase in inventory - O j. Decrease in taxes payable - O

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