Question

Identify whether each of the following would be reported as an operating, investing, or financing activity on the statement of cash flows: a. Repurchase of common stock b. Cash received from customers c. Payment of accounts payable d. Retirement of bonds payable e. Purchase of equipment f. Purchase of inventory for cash

Answer 1

Identification of Transactions as Operating, Investing, or Financing Activity

Transaction Activity

a. Repurchase of common stock Financing (Outflow)

b. Cash received from customers Operating (Inflow)

c. Payment of accounts payable Operating (Outflow)

d. Retirement of bonds payable Financing (Outflow)

e. Purchase of equipment Investing (Outflow)

f. Purchase of inventory for cash Operating (Outflow)

Step-by-step explanation:

Operating activities show the cash activities that produce revenue and net income for the entity.

Investing activities are cash activities involved in the purchase and sale of noncurrent assets and other non-cash equivalent investments.

Financing activities are cash activities related to noncurrent liabilities and owners' equity.