For Each of the Following Items, Indicate by Using the Appropriate

question 172

Short Answer

For each of the following items, indicate by using the appropriate code letter, how the item should be reported in the statement of cash flows, using the direct method.
A. Added in determining cash receipts from customers
B. Deducted in determining cash receipts from customers
C. Added in determining cash payments to suppliers
D. Deducted in determining cash payments to suppliers
E. Cash outflow-investing activity
F. Cash inflow-investing activity
G. Cash outflow-financing activity
H. Cash inflow-financing activity
I. Significant noncash investing and financing activity
J. Is not shown
____ 1. Decrease in accounts payable during a period.
____ 2. Declaration and payment of a cash dividend.
____ 3. Decrease in accounts receivable during a period.
____ 4. Depreciation expense.
____ 5. Conversion of bonds payable into common stock.
____ 6. Decrease in merchandise inventory during a period.
____ 7. Sale of equipment for cash at book value.
____ 8. Issuance of preferred stock for cash.
____ 9. Purchase of land for cash.
____ 10. Loss on sale of a plant asset.

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Definitions:

Treasury Stock

Shares that were issued and subsequently reacquired by the issuing company, reducing the amount of outstanding stock.

Common Stock

A form of investment indicating partial ownership in a company, granting the holder the right to vote and possibly receive dividends.

Stockholders' Equity

The leftover value in a corporation's assets after all obligations are removed, symbolizing the equity held by shareholders.

Par Value

The stated value of a bond, stock share, or coupon as declared by the issuer.