Novak Corporation is preparing its 2020 statement of cash flows, using the indirect method. Presented below is a list of items that may affect the statement. Using the code below, indicate how each item will affect Novak’s 2020 statement of cash flows. Code Letter   Effect A   Added to net income in the operating section D   Deducted from net income in the operating section R-I   Cash receipt in investing section P-I   Cash payment in investing section R-F   Cash receipt in financing section P-F   Cash payment in financing section N   Noncash investing and financing activity   (a)   Purchase of land and building.   select a code letter   (b)   Decrease in accounts receivable.   select a code letter   (c)   Issuance of stock.   select a code letter   (d)   Depreciation expense.   select a code letter   (e)   Sale of land at book value.   select a code letter   (f)   Sale of land at a gain.   select a code letter   (g)   Payment of dividends.   select a code letter   (h)   Increase in accounts receivable.   select a code letter   (i)   Purchase of available-for-sale debt investment.   select a code letter   (j)   Increase in accounts payable.   select a code letter   (k)   Decrease in accounts payable.   select a code letter   (l)   Loan from bank by signing note.   select a code letter   (m)   Purchase of equipment using a note.   select a code letter   (n)   Increase in inventory.   select a code letter   (o)   Issuance of bonds.   select a code letter   (p)   Redemption of bonds payable.   select a code letter   (q)   Sale of equipment at a loss.   select a code letter   (r)   Purchase of treasury stock.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Novak Corporation is preparing its 2020 statement of cash flows, using the indirect method. Presented below is a list of items that may affect the statement. Using the code below, indicate how each item will affect Novak’s 2020 statement of cash flows.

Code Letter
 
Effect
A
  Added to net income in the operating section
D
  Deducted from net income in the operating section
R-I
  Cash receipt in investing section
P-I
  Cash payment in investing section
R-F
  Cash receipt in financing section
P-F
  Cash payment in financing section
N
  Noncash investing and financing activity

 

(a)
 
Purchase of land and building.
 
select a code letter
 
(b)
 
Decrease in accounts receivable.
 
select a code letter
 
(c)
 
Issuance of stock.
 
select a code letter
 
(d)
 
Depreciation expense.
 
select a code letter
 
(e)
 
Sale of land at book value.
 
select a code letter
 
(f)
 
Sale of land at a gain.
 
select a code letter
 
(g)
 
Payment of dividends.
 
select a code letter
 
(h)
 
Increase in accounts receivable.
 
select a code letter
 
(i)
 
Purchase of available-for-sale debt investment.
 
select a code letter
 
(j)
 
Increase in accounts payable.
 
select a code letter
 
(k)
 
Decrease in accounts payable.
 
select a code letter
 
(l)
 
Loan from bank by signing note.
 
select a code letter
 
(m)
 
Purchase of equipment using a note.
 
select a code letter
 
(n)
 
Increase in inventory.
 
select a code letter
 
(o)
 
Issuance of bonds.
 
select a code letter
 
(p)
 
Redemption of bonds payable.
 
select a code letter
 
(q)
 
Sale of equipment at a loss.
 
select a code letter
 
(r)
 
Purchase of treasury stock.
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