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