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The statement of cash flows categorizes a firm's cash flows according to the nature of the activities that give rise to them (for example, operating,
The statement of cash flows categorizes a firm's cash flows according to the nature of the activities that give rise to them (for example, operating, investing, and financing cash flows) and then further differentiates these activities and cash flows into whether they involve sources and uses of cash. Two methods can be used to construct a statement of cash flows: the direct method and the indirect method. Under the indirect method, data from three financial statements are used. These statements include and A firm engages in a variety of activities that generate and require cash payment. The boxes below describe examples of these activities. Classify each transaction as to whether it constitutes an operating, an investing, or a financing cash flow. During the year, Talledaga Trucking Co. paid off $337,000 of its accounts payable. Fresno Furniture Manufacturing Inc. sold its old computer system for $70,000. This transaction is classified as This transaction is classified as A firm engages in a variety of activities that generate and require cash payment. The boxes below describe two examples of these activities. Classify each transaction according to its serving as a source of cash to the firm (cash inflow) or a use of cash (cash outflow). A firm engages in a variety of activities that generate and require cash payment. The boxes below describe two examples of these activities. Classify each transaction according to its serving as a source of cash to the firm (cash inflow) or a use of cash (cash outflow). Situation Source 0 Use 0 Talledaga Trucking Co. paid $450,000 in dividends on its 2.50 million common shares outstanding. This month, Collins Construction Co. collected $87,458 in accounts receivable 0 0
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