Chapter 12, Problem 1CP

Determining Cash Flow Statement Effects of Transactions

For each of the following transactions, indicate whether operating (O), investing (1), or financing activities (F) are affected and whether the effect is a cash inflow ( + ) or outflow (−), or (NE) if the transaction has no effect on cash.

TIP: Think about the journal entry recorded for the transaction. The transaction affects net cash flows if and only if the account Cash is affected.

_______ 1. Purchased new equipment with cash.

_______ 2. Recorded and paid income taxes to the federal government.

_______ 3. Issued shares of stock for cash.

_______ 4. Prepaid rent for the following period.

_______ 5. Paid cash to purchase new equipment.

_______ 6. Issued long-term promissory notes for cash.

_______ 7. Collected payments on account from customers.

_______ 8. Recorded and paid salaries and wages to employees.