Operating activities: Cash flow statement provides information about the cash inflows and outflows during a given period of time. Cash flow from operating activities includes cash effects of transactions that determine net income. Cash flow from investing activities includes procuring and recovering loan amount, acquisition and disposal of property, plant and equipment, and investments. Cash flow from financing activities includes cash effects of transactions which involve owner’s equity and liabilities. To determine how the items given in the question statement get classified in the below categories. (1) Operating—add to net income (2) Operating—deduct from net income (3) Investing activity (4) Financing activity (5) Significant noncash investing and financing activities. Use the indirect method.

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Chapter 23, Problem 1E

To determine

Operating activities: Cash flow statement provides information about the cash inflows and outflows during a given period of time.

Cash flow from operating activities includes cash effects of transactions that determine net income.

Cash flow from investing activities includes procuring and recovering loan amount, acquisition and disposal of property, plant and equipment, and investments.

Cash flow from financing activities includes cash effects of transactions which involve owner’s equity and liabilities.

To determine how the items given in the question statement get classified in the below categories.

(1) Operating—add to net income

(2) Operating—deduct from net income

(3) Investing activity

(4) Financing activity

(5) Significant noncash investing and financing activities. Use the indirect method.

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