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Match Each Transaction to of the Statement of Cash Flows

Question 84

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:

Retired long-term debt before its maturity date

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

Decrease in income taxes payable

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

Recognized loss on the sale of equipment

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

Declared cash dividends

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

Amortization of patent

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:

Retired long-term debt before its maturity date

Decrease in income taxes payable

Recognized loss on the sale of equipment

Declared cash dividends

Amortization of patent

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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