Question

Identify each item as operating (O), investing (1), financing (F), or non-cash (N).

1. Cash receipt from the sale of equipment
2. Cash payment for salaries
3. Cash receipt from the collection of long-term notes receivable
4. Purchase of equipment in exchange for notes payable
5. Cash receipt from the issuance of common stock

Answer 1

Cash receipts from the sale of equipment and collection of long-term notes receivable are considered investing activities, cash payments for salaries are operating activities, and purchase of equipment in exchange for notes payable and cash receipt from issuance of common stock are financing activities.

Step-by-step explanation:

1. Cash receipt from the sale of equipment - Operating (O)

2. Cash payment for salaries - Operating (O)

3. Cash receipt from the collection of long-term notes receivable - Investing (I)

4. Purchase of equipment in exchange for notes payable - Financing (F)

5. Cash receipt from the issuance of common stock - Financing (F)