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

Question 225

Matching

For each of the following items, select by using the appropriate code letter, 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

Acquisition of land in exchange for common stock.

Cash inflow—financing activity

Loss on disposal of land.

Cash inflow—investing activity

Proceeds from sale of equipment at book value.

Deducted from net income

Declaration and payment of a cash dividend.

Cash outflow—financing activity

Issuance of common stock for cash.

Cash outflow—investing activity

Increase in inventory during a period.

Significant noncash investing and financing activity

Redemption of bonds for cash.

Decrease in accounts receivable during a period.

Purchase of a building for cash.

Premises:

Decrease in accounts payable during a period

Acquisition of land in exchange for common stock.

Loss on disposal of land.

Proceeds from sale of equipment at book value.

Declaration and payment of a cash dividend.

Issuance of common stock for cash.

Increase in inventory during a period.

Redemption of bonds for cash.

Decrease in accounts receivable during a period.

Purchase of a building for cash.

Responses:

Added to net income

Cash inflow—financing activity

Cash inflow—investing activity

Deducted from net income

Cash outflow—financing activity

Cash outflow—investing activity

Significant noncash investing and financing activity

Correct Answer:

Premises:

Responses:

Decrease in accounts payable during a period

Acquisition of land in exchange for common stock.

Loss on disposal of land.

Proceeds from sale of equipment at book value.

Declaration and payment of a cash dividend.

Issuance of common stock for cash.

Increase in inventory during a period.

Redemption of bonds for cash.

Decrease in accounts receivable during a period.

Purchase of a building for cash.

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