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Match Each Transaction to of the Statement of Cash Flows

Question 85

Matching

Match each transaction to of the statement of cash flows in which it should be reported using the indirect method from the reporting categories

Premises:

Responses:

Increase in unearned revenue

Cash flows from operating activities—will be added to net income

Payment of cash dividends

Cash flows from operating activities—will be subtracted from net income

Increase in income taxes payable

Cash flows from investing activities—increase as a result of cash inflows

Issuance of common stock to acquire land

Cash flows from investing activities—decrease as a result of cash outflows

Increase in accounts receivable

Cash flows from financing activities—increase as a result of cash inflows

Cash flows from financing activities—decrease as a result of cash outflows

Disclosed as a non-cash transaction in the notes

Appears in operating activities only under the direct method

Premises:

Increase in unearned revenue

Payment of cash dividends

Increase in income taxes payable

Issuance of common stock to acquire land

Increase in accounts receivable

Responses:

Cash flows from operating activities—will be added to net income

Cash flows from operating activities—will be subtracted from net income

Cash flows from investing activities—increase as a result of cash inflows

Cash flows from investing activities—decrease as a result of cash outflows

Cash flows from financing activities—increase as a result of cash inflows

Cash flows from financing activities—decrease as a result of cash outflows

Disclosed as a non-cash transaction in the notes

Appears in operating activities only under the direct method

Correct Answer:

Premises:

Responses:

Cash flows from operating activities—will be added to net income

Cash flows from operating activities—will be subtracted from net income

Cash flows from investing activities—increase as a result of cash inflows

Cash flows from investing activities—decrease as a result of cash outflows

Cash flows from financing activities—increase as a result of cash inflows

Cash flows from financing activities—decrease as a result of cash outflows

Disclosed as a non-cash transaction in the notes

Appears in operating activities only under the direct method

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