CLASSIFICATION OF CASH FLOWS The following are several items that might be disclosed on a company’s statement of cash flows presented using the indirect method.

a. Depreciation expense

b. Issuance of common stock

c. Net income

d. Loss on sale of equipment

e. Converted bonds into common stock

f. Purchase of a building g. Decrease in accounts payable h. Increase in inventory i. Sale of long-term investment j. Payment of interest Required:

Indicate whether each item should be classified as a cash flow from operating activities, a cash flow from investing activities, a cash flow from financing activities, or a noncash investing and financing activity.

Exercise