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