Question

QS 12-1 Transaction classification by activity LO C1 Classify the following cash flows as either operating, investing, or financing activities assume indirect method 1. Sold long-term investments for cash. 2. Received cash payments from customers. 3. Paid cash for wages and salaries. 4. Purchased inventories for cash. 5. Paid cash dividends. 6. Issued common stock for cash. 7 Received cash interest on a note. 8. Paid cash interest on outstanding notes. 9. Received cash from sale of land at a loss 10. Paid cash for property taxes on building.

Answer 1

The cash flows are classified as either operating, investing, or financing activities based on the nature of the transactions.

Step-by-step explanation:

The classification of the cash flows as either operating, investing, or financing activities can be determined by analyzing the nature of the transactions. Here is the classification for each cash flow:

1. Sold long-term investments for cash - Investing activity
2. Received cash payments from customers - Operating activity
3. Paid cash for wages and salaries - Operating activity
4. Purchased inventories for cash - Operating activity
5. Paid cash dividends - Financing activity
6. Issued common stock for cash - Financing activity
7. Received cash interest on a note - Operating activity
8. Paid cash interest on outstanding notes - Operating activity
9. Received cash from sale of land at a loss - Investing activity
10. Paid cash for property taxes on building - Operating activity

In summary, cash flows related to the sale and purchase of long-term assets are classified as investing activities, while cash flows related to revenues, expenses, and financing activities are classified as operating activities.