1. For each of the following items, indicate by using the appropriate code letter, how the item should be reported in the statement of cash flows, using the direct method. (Points : 10)

Potential Matches:

1 : Declaration and payment of a cash dividend.

2 : Decrease in accounts receivable during a period.

3 : Conversion of bonds payable into common stock.

4 : Purchase of land for cash.

5 : Decrease in merchandise inventory during a period.

6 : Decrease in accounts payable during a period.

7 : Issuance of preferred stock for cash.

8 : Sale of equipment for cash at book value.

Answer

: Added in determining cash receipts from customers

: Added in determining cash payments to suppliers

: Deducted in determining cash payments to suppliers

: Cash outflow