Question

Classlfylng Items on the Indirect statement of cash flows [10 mln]

Destiny Corporation is preparing its statement of cash flows by the indirect method. Destiny has the following items for
you to consider in preparing the statement:

____a. Increase in accounts payable

____b. Payment of dividends

____c. Decrease in accrued liabilities

____d. Issuance of common stock

____e. Gain on sale of building

____f. Loss on sale of land

____9. Depreciation expense

____h. Increase in inventory

____i. Decrease in accounts receivable

____j. Purchase of equipment

Requirement

1. Identify each item as am)

0 Operating activity—addition to net income (0+), or subtraction from net income (0-)
0 Investing activity—addition to cash flow (I+), or subtraction from cash flow (I-)

0 Financing activity—addition to cash flow (F+). or subtraction from cash flow (F-)

0 Activity that is not used to prepare the indirect cash flow statement (N)

Answer 1

Please see the answers below:

Step-by-step explanation:

(O+) a. Increase in accounts payable

(F-) b. Payment of dividends

(O-) c. Decrease in accrued liabilities

(F+) d. Issuance of common stock

(O-) e. Gain on sale of building

(O+) f. Loss on sale of land

(O+) g. Depreciation expense

(O-) h. Increase in inventory

(O+) i. Decrease in accounts receivable

(I-) j. Purchase of equipment