Example Eight: Classify the following cash transactions as operating, investing,

Question

Example Eight:

Classify the following cash transactions as operating, investing, or financing cash flows and determine if they are an inflow or an outflow.

Operating / Investing / Financing

Inflow / Outflow

1.

Issuing bonds

2.

Receiving a payment of a notes receivable

3.

Paying dividends to stockholders

4.

Purchasing land

5.

Purchasing inventory

6.

Borrowing from a bank

7.

Issuing common stock

8.

Selling equipment

9.

Receiving payment for services to customers

10.

Selling merchandise

Operating / Investing / Financing

Inflow / Outflow

1.

Issuing bonds

2.

Receiving a payment of a notes receivable

3.

Paying dividends to stockholders

4.

Purchasing land

5.

Purchasing inventory

6.

Borrowing from a bank

7.

Issuing common stock

8.

Selling equipment

9.

Receiving payment for services to customers

10.

Selling merchandise

Explanation / Answer

Classification of activity :

Operating / Investing / Financing Inflow / Outflow 1 Issuing bonds Financing Inflow 2 Receiving a payment of a notes receivable Operating Inflow 3 Paying dividends to stockholders Financing Outflow 4 Purchasing land Investing Outflow 5 Purchasing inventory Operating Outflow 6 Borrowing from bank Financing Inflow 7 Issuing common stock Financing Inflow 8 Selling equipment Investing Inflow 9 Receiving payment for services to customers Operating Inflow 10 Selling merchandise Operating Inflow

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