Q37E - Horngren'S Financial And Managerial Accounting

Question

For each transaction, identify the appropriate section on the statement of cash flows to report the transaction. Choose from: Cash flows from operating activities (O), Cash flows from investing activities (I), Cash flows from financing activities (F), or Is not reported on the statement of cash flows (X). If reported on the statement, decide whether the transaction should be shown as a positive cash flow (+) or a negative cash flow (–):

a. The business received cash from the issuance of common stock.

b. Paid cash on accounts payable for office supplies purchased.

c. Performed services for a customer on account.

d. Cash dividends were paid to stockholders.

e. Received cash from a customer for services performed.

f. Purchased equipment with cash.

g. Paid rent for the month.

h. Purchased land; signed a note payable.

i. Paid employees wages for the week.

j. Incurred utility expense on account.

Step-by-Step Solution

Answer

Transactions	Section	Positive/Negative
a	F	+
b	O	-
c	X
d	F	-
e	O	+
f	I	-
g	O	-
h	X
i	O	-
j	X

Step 1: Explanation on Operating Activities

Operating activities records the receipts of cash from services provided and the expenses paid in cash.

Step 1: Explanation on Investing Activities

Investing activities records the transactions purchase and sale of the fixed assets land, building,etc.

Step 3: Explanation on Financing Activities

Financing activities record the transactions that are related to the issuance of common stock, payment of cash dividends, etc.