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19 July, 20:08

Identify the category of the statement of cash flows in which each transaction would be reported. - Operating (O), Investing (I), Financing (F) or (Non-Cash Investing and Financing Activity (NIF) and indicate whether the item increases (+) or decreases (-) cash.

(a) Purchased Equipment for Cash

(b) Issued Preferred Stock for Cash

(c) Cash Received From Sales to Customers

(d) Cash Paid to Vendorso Gain on Sale of Building

(e) Cash Payment of Income Taxes

(f) Purchased Treasury Stock

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  1. 19 July, 22:34
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    The cash flow statement includes three types of activities which are listed below:

    1. Operating activities: This involves all transactions that after net income impact the working capital. It would subtract the rise in current assets and a reduction in current liabilities, while adding the decline in current assets and an increase in current liabilities.

    It would adjust several changes in working capital. For addition, the depreciation cost is applied to the net income, and the loss on asset sales is added, while the benefit on asset sales is deducted

    2. Investing activities: It tracks operations that include buying and selling long-term properties. The acquisition is a cash outflow, while the selling is a cash inflow

    3. Financing activities: it tracks transactions that have an impact on long-term debt and equity balance of shareholders. Share issue is a cash inflow while redemption and dividend are capital outflows.

    So the classification and impacts are presented below:

    a) Purchased Equipment for Cash

    = Investing (I) and decreases (-) cash.

    (b) Issued Preferred Stock for Cash

    = Financing (F) and increases (+) cash

    (c) Cash Received From Sales to Customers

    = Operating (O) and increases (+) cash

    (d) Cash Paid to Vendors Gain on Sale of Building

    = Operating (O) and decreases (-) cash

    (e) Cash Payment of Income Taxes

    = Operating (O) and decreases (-) cash

    (f) Purchased Treasury Stock

    = No cash transaction is involved. (Non-Cash Investing and Financing Activity (NIF)
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