Question

Select a letter to mark each item in the following fist as a cash flow from Operating, Investing, or Financing activities, (indicate the effect of the cash inflow or outflow By selecting a letter with parentheses for a cash outflow or a letter without parentheses to indicate a cash inflow.) Cash paid for dividends

Cash collected from customers
Cash received when signing a note
Cash paid to employees
Cash paid to purchase equipment
Cash received from issuing stock

Answer 1

Step-by-step explanation:

The cash flow statement contains three types of activities which are defined below:

1. Operating activities: It includes those transactions that after net income affect the working capital. It would subtract the rise in current assets and a reduction in current liabilities, while adding the decline in current assets and an increase in current liabilities.

It would adjust those changes in working capital. In addition, the depreciation expense is added to the net income, and the loss on asset sales is added, while the gain on asset sales is deducted.

Plus it also reported all cash sales as cash inflows and all cash expenses as cash inflows

2. Investing activities: it records activities that include buying and selling long-term assets. The purchase is a cash outflow while the sale is a cash inflow

3. Financing activities: it records activities that have an impact on long-term liability and equity balance of stockholders. Share issue is a cash inflow whereas redemption and dividend are cash outflows.

So the categorization is presented below:

Cash paid for dividends = Financing activity and cash outflow

Cash collected from customers = Operating activity and cash inflow

Cash received when signing a note = Financing activity and cash inflow

Cash paid to employees = Operating activity and cash outflow

Cash paid to purchase equipment = Investing activity and cash outflow

Cash received from issuing stock = Financing activity and cash inflow