Use the Following Codes to Indicate How the Cash Flow

question 2

Multiple Choice

Use the following codes to indicate how the cash flow effect, if any, of each transaction or event would be reported on a statement of cash flows if the operating activities section is prepared using the indirect method. (Choices may be used more than once.)
-Issued stock to buy a building.

• A)Operating activity--add to net income
• B)Operating activity--deduct from net income
• C)Inflow from investing activity
• D)Outflow from investing activity
• E)Inflow from financing activity
• F)Outflow from financing activity
• G)Noncash investing and financing activity
• H)Not reported on statement of cash flows

---

Definitions:

Credit Department

The division within a company or financial institution that is responsible for managing customer credit and collecting payments.

DSO

Days Sales Outstanding (DSO) is a measure of the average number of days that it takes a company to collect payment after a sale has been made.

Money

An officially issued legal tender that typically includes coins and paper notes, used as a medium of exchange for goods and services.

Cash Sales

Transactions where payment for goods or services is made immediately in cash or via electronic means rather than on credit.