E5-15 (Statement of Cash Flows-Classifications) The major classifications of act

Question

E5-15 (Statement of Cash Flows-Classifications) The major classifications of activities reported in the statement of cash flows are operating, investing, and financing. For this question, assume the following: Instructions Assume that the statement of cash flows is being prepared in accordance with ASPE using the indirect method. Classify each of the transactions in the lettered list that follows as: 1. Operating activity 2. Investing activity Transactions (a) Issuance of common shares (b) Purchase of land and building (c) Redemption of bonds (d) Proceeds on sale of equipment (e) Depreciation of machinery (f) Amortization of patent (g) Issuance of bonds for plant assets 3. Financing activity 4. Not reported as a cash flow (h) Payment of cash dividends (i) Exchange of furniture for office equipment C) Loss on sale of equipment (k) Increase in accounts receivable during year () Decrease in accounts payable during year (m) Payment of interest (n) Receipt of dividend revenue

Explanation / Answer

Classification

Transaction no Classification a Financing activity b Investing activity c Financing activity d Investing activity e Operating activity f Operating activity g Non reported in cash flow h Financing activity i Non reported in cash flow j Operating activity k Operating activity l Operating activity m Operating activity n Investing activity

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