Question

Distinguish among operating, investing, and financing activities for the statement of cash flows indirect method) Aurum Investments specializes in low-risk government bonds. Identify each of​ Aurum's transactions as operating​ (O), investing​ (I), financing​ (F), noncash investing and financing​ (NIF), or a transaction that is not reported on the statement of cash flows​ (N). Indicate whether each item increases​ (+) or decreases ​(minus​) cash. The indirect method is used for operating cash flows.
A. Acquisition of equipment by issuance of note payable
B. Purchase of long-term investment with cash
C. Issuance of long-term note payable to borrow cash
D. Increase in prepaid expenses
E. Decrease in accrued liabilities
F. Loss of sale of equipment
G. Decrease in accounts receivable
H. Depreciation of equipment
I. Increase in accounts payable Amortization of intangible assets
K. Purchase of treasury stock
L. Payment of long-term debt
M. Increase in salary payable
N. Cash sale of land
O. Sale of long-term investment
P. Acquisition of building by cash payment
Q. Net income
R. Issuance of common stock for cash
S. Payment of cash dividend

Answer 1

Answer:

A.  noncash investing and financing​ (NIF)

B.  investing​ (I), decreases ​(minus​)

C.  financing​ (F), increases​ (+)

D. operating​ (O), decreases ​(minus​)

E.  operating​ (O), increases​ (+)

F.  operating​ (O), increases​ (+)

G. operating​ (O), increases​ (+)

H. operating​ (O), increases​ (+)

I.   operating​ (O), increases​ (+)

J.  operating​ (O), increases​ (+)

K.  financing​ (F), decreases ​(minus​)

L.  financing​ (F), decreases ​(minus​)

M. operating​ (O), increases​ (+)

N. investing​ (I), increases​ (+)

O. investing​ (I), increases​ (+)

P. investing​ (I), decreases ​(minus​)

Q. operating​ (O), increases​ (+)

R. financing​ (F), increases​ (+)

S. financing​ (F), decreases ​(minus​)

Explanation:

Operating Activities includes the Net Income and adjustments to the net income for (1) non-cash items previously included or deducted and (2) changes in working capital.

Investing Activities includes sale and investments in Property , Plant and Equipment items.

Financing Activities includes sale of ownership interest and aquisition of financing sources.

Answer 2

To answer this question, the cash flow from operating activities, cash flow from investing activities, and cash flow from financing activities are first as explained.

Cash flow from operating activities represents the revenue generated by a company's ongoing, routine business activity, such as manufacturing and selling things or providing a service to clients.

On a company's cash flow statement, cash flow from operating activities is the first section shown they comprise of net Income, as well as revisions to net Income for previously included or subtracted non-cash items and changes in working capital.

Cash flow from investing activities refer to the cash generated or expended on non-current assets that are expected to yield a profit in the future.

Capital expenditures, lending money, and the sale of investment securities are examples of cash flow from investing activities.

Cash flow from financing activities portion of a company's cash flow statement illustrates the net cash flows used to finance the business.

Examples of cash flow from financing activities include sales of shares, issue of debentures, and among others.

As a result of the above explanation, we have:

A. Acquisition of equipment by issuance of note payable = NIF

B. Purchase of long-term investment with cash = I-

C. Issuance of long-term note payable to borrow cash = F+

D. Increase in prepaid expenses = O-

E. Decrease in accrued liabilities = O-

F. Loss of sale of equipment = O+

G. Decrease in accounts receivable = O+

H. Depreciation of equipment = O+

I. Increase in accounts payable = O+

J. Amortization of intangible assets = O+

K. Purchase of treasury stock = F-

L. Payment of long-term debt = F-

M. Increase in salary payable = O+

N. Cash sale of land = I+

O. Sale of long-term investment = I+

P. Acquisition of building by cash payment = I-

Q. Net income = O+

R. Issuance of common stock for cash = F+

S. Payment of cash dividend = F-

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