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For Each of the Following Items, Indicate by Using the Appropriate

Question 159

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For each of the following items, indicate by using the appropriate code letter, how the item should be reported in the statement of cash flows, using the indirect method.

Premises:
Decrease in accounts payable during a period
Declaration and payment of a cash dividend.
Loss on sale of land.
Decrease in accounts receivable during a period.
Redemption of bonds for cash.
Proceeds from sale of equipment at book value.
Issuance of common stock for cash.
Purchase of a building for cash.
Acquisition of land in exchange for common stock.
Increase in merchandise 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:

Decrease in accounts payable during a period
Declaration and payment of a cash dividend.
Loss on sale of land.
Decrease in accounts receivable during a period.
Redemption of bonds for cash.
Proceeds from sale of equipment at book value.
Issuance of common stock for cash.
Purchase of a building for cash.
Acquisition of land in exchange for common stock.
Increase in merchandise inventory during a period.
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