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Identify Each of the Following Transactions as an Operating Activity

question 101

Essay

Identify each of the following transactions as an operating activity (O), an investing activity (I), a financing activity (F), or a transaction that is not reported on the statement of cash flows (N).
a) ________ Decrease of supplies
b) ________ Decrease of accounts payable
c) ________ Declaration of cash dividends
d) ________ Purchase of building for cash
e) ________ Increase of accounts receivable
f) ________ Sold plant equipment for cash
g) ________ Borrowed money from a bank
h) ________ Payment on principal of a note


Definitions:

Obligations

Legal or moral duties that an individual or entity is bound to perform or uphold.

Substantially Perform

Fulfilling enough of a contractual obligation or duty that any remaining uncompleted parts are considered minor or insignificant.

Accord and Satisfaction

A legal settlement where two parties agree to resolve a dispute by the debtor providing payment or performance that is different from what was originally owed.

Operation of Law

Changes in legal rights or obligations that occur automatically due to legal rules, rather than the action of any party.

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