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The statement of cash flows categorizes like transactions for optimal reporting.

Identify each item as a(n):

  • Operating activity—add to net income (O+) or subtraction from net inc. (O–)
  • Investing activity—cash inflow (I+) or cash outflow (I–)
  • Financing activity—cash inflow (F+) or cash outflow (F–)
  • Non-cash Investing and Financing activity (N)

Cash Flow ItemsClassification
Loss on sale of land
Increase in Salaries Payable
Payment of cash dividend
Acquiring building for common stock
Cash sale of land
Issuing a long-term note payable to borrow cash
Depreciation expense
Payment of long-term debt
Net Income
Increase in Accounts Payable
Decrease in Merchandise Inventory
Purchase of treasury stock
Issuance of common stock
Decrease in Accrued Liabilities
Increase in Prepaid Expense
Acquiring equipment by issuing Note payable


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