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

Question 121

Matching

Indirect 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 indirect method. The same letter may be used more than once.

Premises:

Responses:

Declaration and payment of a cash dividend

Cash outflow-investing activity

Retirement of bonds at maturity for cash

Cash outflow-financing activity

Increase in merchandise inventory during a period

Added to profit

Proceeds from sale of equipment at carrying amount

Cash inflow-financing activity

Decrease in accounts receivable during a period

Significant noncash investing and financing activity

Issue of common shares for cash

Is not shown

Decrease in accounts payable during a period

Deducted from profit

Loss on sale of land

Cash inflow-investing activity

Acquisition of land in exchange for common shares

Purchase of a building for cash

Premises:

Declaration and payment of a cash dividend

Retirement of bonds at maturity for cash

Increase in merchandise inventory during a period

Proceeds from sale of equipment at carrying amount

Decrease in accounts receivable during a period

Issue of common shares for cash

Decrease in accounts payable during a period

Loss on sale of land

Acquisition of land in exchange for common shares

Purchase of a building for cash

Responses:

Cash outflow-investing activity

Cash outflow-financing activity

Added to profit

Cash inflow-financing activity

Significant noncash investing and financing activity

Is not shown

Deducted from profit

Cash inflow-investing activity

Correct Answer:

Premises:

Responses:

Declaration and payment of a cash dividend

Retirement of bonds at maturity for cash

Increase in merchandise inventory during a period

Proceeds from sale of equipment at carrying amount

Decrease in accounts receivable during a period

Issue of common shares for cash

Decrease in accounts payable during a period

Loss on sale of land

Acquisition of land in exchange for common shares

Purchase of a building for cash

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