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Direct Method for Each of the Following Items, Indicate by Using the Using

Question 169

Matching

Direct Method
For each of the following items, indicate by using the appropriate code letter, how the item should be reported in the cash flow statement, using the direct method. The same letter may be used more than once.

Premises:

Responses:

Loss on sale of land

Added in determining cash payments to suppliers

Decrease in merchandise inventory during a period

Cash outflow-financing activity

Decrease in accounts receivable during a period

Cash outflow-investing activity

Declaration and payment of a cash dividend

Added in determining cash receipts from customers

Purchase of land for cash

Deducted in determining cash receipts from customers

Sale of equipment for cash at carrying amount

Significant noncash investing and financing activity

Decrease in accounts payable during a period

Is not shown

Depreciation expense

Cash inflow-financing activity

Conversion of bonds into common shares

Cash inflow-investing activity

Issue of preferred shares for cash

Deducted in determining cash payments to suppliers

Premises:

Loss on sale of land

Decrease in merchandise inventory during a period

Decrease in accounts receivable during a period

Declaration and payment of a cash dividend

Purchase of land for cash

Sale of equipment for cash at carrying amount

Decrease in accounts payable during a period

Depreciation expense

Conversion of bonds into common shares

Issue of preferred shares for cash

Responses:

Added in determining cash payments to suppliers

Cash outflow-financing activity

Cash outflow-investing activity

Added in determining cash receipts from customers

Deducted in determining cash receipts from customers

Significant noncash investing and financing activity

Is not shown

Cash inflow-financing activity

Cash inflow-investing activity

Deducted in determining cash payments to suppliers

Correct Answer:

Premises:

Responses:

Loss on sale of land

Decrease in merchandise inventory during a period

Decrease in accounts receivable during a period

Declaration and payment of a cash dividend

Purchase of land for cash

Sale of equipment for cash at carrying amount

Decrease in accounts payable during a period

Depreciation expense

Conversion of bonds into common shares

Issue of preferred shares for cash

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Q168: Indirect Method
For each of the following items,

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