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


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