Under which caption listing, which area of the Statement of Cash Flow would the

Question

Under which caption listing, which area of the Statement of Cash Flow would the items listed below specifically be reported?

Captions

A. Operating Activities – direct method

B. Investing Activities

C. Financing Activities

D. Noncash exchanges

E. Reconciliation of net income to cash from operating activities

F. Non

Items

______ 1. Sale of bonds payable for cash

______ 2. Increase in cash

______ 3. Purchase of land for cash

______ 4. Decrease in prepaid insurance

______ 5. Payment of salaries

______ 6. Decrease in accrued wages payable

______ 7. Issuance of preferred stock in exchange for a new machine

______ 8. Cash dividend declared but not yet paid

______ 9. Stock dividend or stock split

______ 10. Depreciation expense

______ 11. Extraordinary gain on bonds payable retirement

______ 12. Purchase of merchandise for resale on credit

______ 13. Collection of accounts receivable

______ 14. Write-off of a bad debt (Allowance method)

______ 15. Payment of accounts payable

Explanation / Answer

Solution:

Caption Listing 1 Sale of Bonds Payable Financing activities 3 Purchase of Land for Cash Investing activities 4 Decrease in prepaid insurance Reconciliation of net income to cash from operating activities 5 Payment of Salaries Operating activities - Direct Method 6 Decrease in accured wages payable Reconciliation of net income to cash from operating activities 7 Issuance of preferred stock in exchange for a new machine Noncash exchanges 8 Cash Dividend declared but not yet paid NON 10 Depreciation expense Reconciliation of net income to cash from operating activities 13 Collection of accounts receivables Operating activities - Direct Method 14 Write - off of a bad debt ( allowance method ) Reconciliation of net income to cash from operating activities 15 Payment of accounts payable Operating activities - Direct Method

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