Textbook Problem

Analyzing Balance Sheet Accounts

A review of the balance sheet of Dixon Company revealed the following changes in the account balances:

a. Increase in retained earnings

b. Increase in equipment

c. Increase in interest receivable

d. Decrease in bonds payable

e. Increase in unearned rent revenue

f. Decrease in prepaid insurance

g. Decrease in long-term investment

h. Increase in accounts payable

Required:

1. Classify each change in the balance sheet account as a cash flow from operating activities, a cash flow from investing activities, a cash flow from financing activities, or a noncash investing and financing activity.

2. Indicate whether each of the changes in the balance sheet accounts produces an increase in cash, produces a decrease in cash, or is a noncash activity.