Question

Destiny Corporation is preparing its statement of cash flows by the indirect method. Destiny has the following items for you to consider in preparing the​ statement:

O+ a. Increase in accounts payable
F- b. Payment of dividends
O- c. Decrease in accrued liabilities
F+ d. Issuance of common stock
O- e. Gain on sale of building
O+ f. Loss on sale of land
O+ g. Depreciation expense
O- h. Increase in merchandise inventory
O+ i. Decrease in accounts receivable
I- j. Purchase of equipment

Answer 1

O+ a. Increase in accounts payable

F- b. Payment of dividends

O- c. Decrease in accrued liabilities

F+ d. Issuance of common stock

O- e. Gain on sale of building

O+ f. Loss on sale of land

O+ g. Depreciation expense

O- h. Increase in merchandise inventory

O+ i. Decrease in accounts receivable

I- j. Purchase of equipment

Step-by-step explanation:

The requirement of the question is to indicate whether each of the items is an addition to addition to net income (O+) or subtraction (O-) under operating activities section, investing activity (cash inflow I+), (cash outflow I-),financing activity (cash inflow F+), (cash outflow F-) and activity not used to prepare the cash flows.

All the signs above are correct.