Chapter 23, Problem 1BE

To determine

Operating activities: The items that are directly linked with the transactions that affect the net income of the company are termed as operating activities.

Financing activities: Financing activities include all those transactions that involve liability and stockholders’ equity items.

Investing activities: Investing activities include purchasing and selling of long-term assets, making and collecting loans acquiring and disposing of investments and productive long-lived assets.

Noncash investing and financing activities: There are certain transactions that companies report neither in investing activity nor in financing activity since they are noncash in nature. These noncash components are generally reported at the bottom of the statement or in a separate note.

To categorize: To categorize above items into below categories.

Code Letter	Effect
A	Added to net income in the operating section
D	Deducted from net income in the operating section
R-I	Cash receipt in investing section
P-I	Cash payment in investing section
R-F	Cash receipt in financing section
P-F	Cash payment in financing section
N	Noncash investing and financing activity