BuyFindarrow_forward

Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773

Solutions

Chapter
Section
BuyFindarrow_forward

Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773
Textbook Problem
15 views

Consider the following independent activities:

  1. a. Payment of a cash dividend
  2. b. Amortization of intangible asset
  3. c. Gain on disposal of equipment
  4. d. Exchange of common stock for land
  5. e. Increase in accrued wages
  6. f. Retirement of preferred stock
  7. g. Purchase of a new plant
  8. h. Depreciation expense
  9. i. Decrease in accounts payable
  10. j. Increase in accounts receivable
  11. k. Proceeds from the sale of land
  12. l. Increase in prepaid expenses
  13. m. Retirement of a bond
  14. n. Purchase of a 60% interest in another company

Required:

Classify these transactions as operating activities, investing activities, financing activities, or financing/ investing not affecting cash. If an activity is an operating activity, indicate whether it will be added to or deducted from net income to compute cash from operations.

To determine

Identify the transactions as an operating, investing and financing activity. Also, state that whether the effect of transaction will be added to or deducted from the net income if the activity is an operating activity.

Explanation

Cash Flows from Operating Activities:

This category of a cash flow statement shows the operational and profit generating activities in a firm. The operating cash flows increase or decrease the current assets and current liabilities of a firm.

Cash Flows from Investing Activities:

This category of a cash flow statement shows the investing activities which involves the purchase or sale of long-term assets. This includes acquiring new asset or acquiring stock in another company.

Cash Flows from Financing Activities:

This category of a cash flow statement includes those activities which help a company to raise cash from creditors and owners. Financing activities basically show those activities that are required to fund a company.

The classification of the transactions as operating, investing and financing activity and as source of cash or use of cash is shown in the table below:

Serial No.TransactionType of activityAdded to or deducted from net income
a.Payment of cash dividend.Financing activity 
b.Amortization of intangible asset.Operating activityAdded to net income
c.Gain on disposal of equipment...

Still sussing out bartleby?

Check out a sample textbook solution.

See a sample solution

The Solution to Your Study Problems

Bartleby provides explanations to thousands of textbook problems written by our experts, many with advanced degrees!

Get Started

Additional Business Solutions

Find more solutions based on key concepts

Show solutions add

Describe the eight elements of ERM.

Accounting Information Systems

Should an economic model describe reality exactly?

Principles of Microeconomics (MindTap Course List)

List and describe four determinants of productivity.

Principles of Macroeconomics (MindTap Course List)

NPV PROFILES: TIMING DIFFERENCES An oil-drilling company must choose between two mutually exclusive extraction ...

Fundamentals of Financial Management, Concise Edition (with Thomson ONE - Business School Edition, 1 term (6 months) Printed Access Card) (MindTap Course List)

Identify the sources of the information needed to prepare the statement of owners equity.

College Accounting, Chapters 1-27 (New in Accounting from Heintz and Parry)

Explain how an increase in the price level affects the real value of money.

Principles of Macroeconomics (MindTap Course List)

How often should standards be revised?

Survey of Accounting (Accounting I)