Classification of items as operating, investing, or financing (Learning Objective 2) 10–15 min.

Identify each of the following transactions as one of the following:

• Operating activity (O)

• Investing activity (I)

• Financing activity (F)

• Noncash investing and financing activity (NIF)

For each item, indicate whether it represents an increase (+) or a decrease (–) in cash.

The indirect method is used to report cash flows from operating activities.

a. _____ Cash sale of land

b. _____ Issuance of long-term note payable in exchange for cash

c. _____ Depreciation expense of equipment

d. _____ Purchase of treasury stock

e. _____ Issuance of common stock for cash

f. _____ Increase in Accounts Payable g. _____ Net income h. _____ Payment of cash dividend i. _____ Decrease in Accrued Liabilities j. _____ Loss on sale of land k. _____ Acquisition of building by issuance of notes payable l. _____ Payment of long-term debt m. _____ Acquisition of building by issuance of common stock n. _____ Decrease in Accounts Receivable o. _____ Decrease in Inventory p. _____ Increase in prepaid expenses AppendixLO1