Exhibit 12-2
Carr Company has the following cash flows to account for:
(1)Cash receipts for the sale of common stock.
(2)Cash payments for the purchases of merchandise.
(3)Cash receipts from the collection of accounts receivable.
(4)Cash receipts from the collection of principal on loans made to others.
(5)Cash payments to shareholders for dividends.
(6)Cash payments for the purchase of machinery.
-Refer to Exhibit 12-2.Which of these items would appear in the operating activities section of the statement of cash flows?

Question

Quizplus · Accepted Answer

Items 2 and 3 are related to the company's core operations (sales and collection of accounts receivable) and therefore would appear in the operating activities section of the statement of cash flows. Items 4 and 6 are related to investing activities (making loans and purchasing machinery) and would not appear in the operating activities section. Items 1 and 5 are related to financing activities (issuing stock and paying dividends) and also would not appear in the operating activities section.

Exhibit 12-2 Carr Company Has the Following Cash Flows to Account For