Question

Identify whether each of the following would be reported as an operating, investing, or financing activity on the statement of cash flows:

1.
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
2.
A. Purchase of investments
B. Disposal of equipment
C. Payment for selling expenses
D. Collection of accounts receivable
E. Cash sales
F. Issuance of bonds payable

Answer 1

Answer and Explanation:

The classification is as follows

1.

A. financing activity = Cash outflow as cash is gone

B. Operating activity = Cash inflow as cash is received

C. Operating activity = Cash outflow as cash is gone

D. Financing activity = Cash outflow as cash is gone

E. Investing activity = Cash outflow as cash is gone

2.

A. Investing activity = Cash outflow as cash is gone

B, Investing activity = Cash inflow as cash is received

C. Operating activity = Cash outflow as cash is gone

D. Operating activity = Cash inflow as cash is received

E. Operating activity = Cash inflow as cash is received

F.financing activity = Cash inflow as cash is received