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Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281

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BuyFindarrow_forward

Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281
Textbook Problem
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Identify these cash flows as cither investing activities (I) or financing activities (F).

  1. a. payment for purchase of a building
  2. b. payment of dividends
  3. c. proceeds from sale of land, at cost
  4. d. proceeds from issuance of note
  5. e. proceeds from issuance of bonds

To determine

Indicate the transactions to be classified as financing activities or investing activities.

Explanation

Investing activities: Investing activities include cash inflows and cash outflows from purchase and sale of land, equipment, or investments.

Financing activities: Financing activities includes cash inflows and outflows from issuance of common stock and debt, and payment of debt and dividends.

Justification to the statement:

    a. Acquiring property is an investing activity of a company. Thus, it will be presented under the investing activity section as cash outflow.

    b. Cash paid for dividend is financing activity of a company...

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