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Match the Statements Below with the Appropriate Item Based on How

Question 217

Matching

Match the statements below with the appropriate item based on how the item should be reported in the statement of cash flows, using the indirect method.

Premises:

Responses:

Decrease in accounts payable during a period

Added to net income

Declaration and payment of a cash dividend.

Deducted from net income

Loss on disposal of land.

Cash outflow—investing activity

Decrease in accounts receivable during a period.

Cash inflow—investing activity

Redemption of bonds for cash.

Cash outflow—financing activity

Proceeds from sale of equipment at book value.

Cash inflow—financing activity

Issuance of ordinary shares for cash.

Significant noncash investing and financing activity

Purchase of a building for cash.

Acquisition of land in exchange for ordinary shares.

Increase in inventory during a period.

Premises:

Decrease in accounts payable during a period

Declaration and payment of a cash dividend.

Loss on disposal of land.

Decrease in accounts receivable during a period.

Redemption of bonds for cash.

Proceeds from sale of equipment at book value.

Issuance of ordinary shares for cash.

Purchase of a building for cash.

Acquisition of land in exchange for ordinary shares.

Increase in inventory during a period.

Responses:

Added to net income

Deducted from net income

Cash outflow—investing activity

Cash inflow—investing activity

Cash outflow—financing activity

Cash inflow—financing activity

Significant noncash investing and financing activity

Correct Answer:

Premises:

Responses:

Decrease in accounts payable during a period

Declaration and payment of a cash dividend.

Loss on disposal of land.

Decrease in accounts receivable during a period.

Redemption of bonds for cash.

Proceeds from sale of equipment at book value.

Issuance of ordinary shares for cash.

Purchase of a building for cash.

Acquisition of land in exchange for ordinary shares.

Increase in inventory during a period.

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