Question

Indicate where each item should be presented in the statement of cash flows (indirect method) using these four major classifications: operating activity (that is, the item would be listed among the adjustments to net income to determine net cash provided by operating activities under the indirect method), investing activity, financing activity, or significant noncash investing and financing activity.

a. Payment of interest on notes payable.
b. Exchange of land for patent.
c. Sale of building at book value.
d. Payment of dividends.
e. Depreciation.
f. Receipt of interest on notes receivable
g. Issuance of capital stock.
h. Amortization of patent.
i. Issuance of bonds for land.
j. Purchase of land.

Answer 1

Answer:

a.  Payment of interest on notes payable - Operating Activity

b.  Exchange of land for patent - Non Cash investing activity

c.  Sale of building at book value - Investing Activity

d.  Payment of dividends - Financing Activity

e.  Depreciation - Operating Activity

f.   Receipt of interest on notes receivable - Operating Activity

g.  Issuance of Capital Stock - Financing Activity

h.  Amortization of patent - Operating Activity

i.   Issuance of bonds for land - Non Cash investing activity

j.   Purchase of land - Investing Activity