8) Assuming a statement of cash flows is prepared using the indirect method, ind

Question

8) Assuming a statement of cash flows is prepared using the indirect method, indicate the following 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.

Add to Net income - A   

Deduct from Net income - B

Cash inflow from investing activities - C

Cash outflow from investing activities - D

Cash Inflow from financing activities - E

Cash outflow from financing activities - F

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

Explanation / Answer

1. E

2. D

3. A

4. D

5. E

6. B

7. A

8. E

9. C

10. not included.

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