Classifications of Cash Flows.

A company's statement of cash flows and the accompanying schedule of investing and financing activities not affecting cash may contain the following major sections:

Operating Activities

Investing Activities

Financing Activities

Investing and Financing Activities Not Affecting Cash

The following is a list of items that might appear on a company's statement of cash flows or in the accompanying schedule.

Required: Using the letters A through D, indicate in which section of the statement of cash flows (or the accompanying schedule) the preceding items would most likely be classified. After each letter indicate with a plus (+) or a minus (-) whether the items would be reported as an increase (inflow) or decrease (outflow). If an item would not be reported in the statement (or the accompanying schedule), select X.

Decrease in accounts payable

Payment of dividends

Increase in income taxes payable

Proceeds from issuance of note

Payment for purchase of available-for-sale temporary investments

Amortization of premium on investment in bonds

Increase in prepaid expenses

Payment of note

Gain on sale of equipment

Proceeds from sale of land

Net income

Payment for acquisition of building

Depreciation expense

Issuance of common stock for land

Proceeds (principal) from collection of note

Amortization of discount on bonds payable

Decrease in deferred taxes payable

Proceeds from issuance of bonds

Issuance of stock dividend

Payment for purchase of treasury stock

Depletion expense

Increase in inventory

Conversion of preferred stock to common stock

Proceeds from issuance of stock

Lease of equipment under capital lease

Proceeds from sale of patent