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