QUESTION 3 (20 POINTS) The cash flows statement categories like transactions for

Question

QUESTION 3 (20 POINTS) The cash flows statement categories like transactions for optimal reporting. Identi following transactions as one of the following: fy each of the 1. Operating activity (O) 2. Investing activity () 3. Financing activity (F) 4. Non-cash investing and financing activity (NIF 5. Transaction that is not reported on the statement of cash flows (N) For each cash flow, indicate whether the item increases (+) or decreases (-) cash. Payment of cash dividend Loss on sale of land Net income Depreciation Expense Decrease in Accrued Liabilities Cash sale of Equipment Decrease in Merchandise Inventory Purchase of treasury stock Issuance of common stock A. B. C. F. G. H. -J. Payment of long-term debt

Explanation / Answer

Classify the items :

No Transaction Activity Cash increase/decrease 1 payment of cash dividend Decrease cash Financing activity 2 Loss on sale of land Increase cash Operating activity 3 Net income Increase cash Operating activity 4 Depreciation expenses Increase cash Operating activity 5 Decrease in accured liabilities Decrease cash Operating activity 6 Cash sale of equipment Increase cash Investing activity 7 Decrease in merchandise inventory Increase cash Operating activity 8 Purchase of treasury stock Decrease cash Financing activity 9 Issuance of common stock Increase cash Financing activity 10 Payment of long term debt Decrease cash Financing activity

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