
Concept explainers
Classification of
• LO21–3 through LO21–6
Listed below are several transactions that typically produce either an increase or a decrease in cash. Indicate by letter whether the cash effect of each transaction is reported on a statement of cash flows as an operating (O), investing (I), or financing (F) activity. Transactions
___F_ 1. Sale of common stock
_____ 2. Sale of land
_____ 3. Purchase of
_____ 4. Merchandise sales
_____ 5. Issuance of a long-term note payable
_____ 6. Purchase of merchandise
_____ 7. Repayment of note payable
_____ 8. Employee salaries
_____ 9. Sale of equipment at a gain
_____ 10. Issuance of bonds
_____ 11. Acquisition of bonds of another corporation
_____ 12. Payment of semiannual interest on bonds payable
_____ 13. Payment of a cash dividend
_____ 14. Purchase of a building
_____ 15. Collection of nontrade note receivable (principal amount)
_____ 16. Loan to another firm
_____ 17. Retirement of common stock
_____ 18. Income taxes
_____ 19. Issuance of a short-term note payable
_____ 20. Sale of a copyright

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