Textbook Problem

Classification of Cash Flows

Foster Company reported the following items in its statement of cash flows presented using the indirect method.

1. Interest paid on long-term note payable
2. Proceeds from sale of building
3. Increase in accounts payable
4. Increase in retained earnings
5. Cash dividend paid to stockholders
6. Taxes paid to the federal government

Required:

Indicate whether each item should be classified as a cash flow from operating activities, a cash flow from investing activities, or a cash flow from financing activities.