Exercise 11-3 Determine proper classification (LO11-1) of an income statement, b

Question

Exercise 11-3 Determine proper classification (LO11-1) of an income statement, balance sheet, and additional information from the accounting records of Gadgets, Inc., reveals the following items. Required: Select the section of the statement of cash flows in which each of these items would be reported: operating activities (indirect method), investing activit noncash activities note ies, financing aclvities, or a separ tems 1. Purchase of a patent. 2. Depreciation expense 4. Issuance of a note payable 5. Increase in inventory 6. Collection of notes receivable. 7. Purchase of equipment. 8. Exchange of long-term assets. 9. Decrease in accounts payable. 10. Payment of dividends. Type here to search

Explanation / Answer

Solution :-

Note :- Issuance of a note payable (4) and Payment of dividend (10) are financing activity on cash flow statement.

Items Activities 1. Investing. 2. Operating. 3. Operating. 4. Financing. 5. Operating. 6. Operating. 7. Investing. 8. Non-cash activity. 9. Operating. 10. Financing.

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