Question

Classifying Cash Flows - Identify whether each of the following would be reported as an operating, investing, or financing activity on the statement of cash flows:

a. Retirement of bonds payable
b. Purchase of inventory for cash
c. Cash sales
d. Repurchase of common stock
e. Payment of accounts payable
f. Disposal of equipment

Answer 1

Classifying Cash Flows:

Retirement of bonds payable ⇒ Financing activity

Purchase of inventory for cash ⇒ Operating activity

Cash sales ⇒ Operating activity

Repurchase of common stock ⇒ Financing activity

Payment of accounts payable ⇒ Operating activity

Disposal of equipment ⇒ Investing activity