Question

Matching Items Reported to Cash Flow Statement Categories (Indirect Method).

Adidas AG is a global company that designs and markets sports and fitness products, including footwear, apparel, and accessories. Some of the items included in its recent annual consolidated statement of cash flows presented using the indirect method are listed here. Indicate whether each item is disclosed in the Operating Activities, Investing Activities, or Financing Activities section of the statement or use Not Applicable if the item does not appear on the statement. (Note: This is the exact wording used on the actual statement).
1. Dividends paid.
2. Repayments of short-term borrowings.
3. Depreciation and amortization.
4. Proceeds from reissuance of treasury shares to employees.
5. [Change in] Accounts payable and other liabilities.
6. Cash collections from customers.
7. Purchase of investments.
8. Net income.
9. Purchase of property, plant, and equipment.
10. Increase in receivables and other assets.

Answer 1

1. Dividends paid.

Classification: Financing Activity

2. Repayments of short-term borrowings.

Classification: Financing Activity

3. Depreciation and amortization.

Classification: Operating Activities

4. Proceeds from reissuance of treasury shares to employees.

Classification: Financing Activity

5. Change in Accounts payable and other liabilities.

Classification: Operating Activities

6. Cash collections from customers.

Classification: Not Applicable

7. Purchase of investments.

Classification: Financing Activity

8. Net income.

Classification: Operating Activities

9. Purchase of property, plant, and equipment.

Classification: Investing Activities

10. Increase in receivables and other assets.

Classification: Operating Activities