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