Identify Where Each of the Following Transactions Would Be Shown

question 35

Essay

Identify where each of the following transactions would be shown on the statement of cash flows when it is prepared by the indirect method. Identify each transaction as an operating activity (O), an investing activity (I), a financing activity (F), or transaction that is not reported on the statement of cash flows (N).
a) ________ Paid for fire insurance in advance
b) ________ Cash used to purchase new computers
c) ________ Cash used to retire bonds outstanding
d) ________ Depreciation expense
e) ________ Cash used to purchase fixed assets
f) ________ Cash proceeds from sale of the company's own stock
g) ________ Bought back own stock
h) ________ Received cash dividends

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Definitions:

Cost of Capital

The return rate that a company must earn on its projects to maintain its market value and attract funds.

Variable Cost

Costs that change in proportion to the level of production or sales, such as materials and labor.

Capacity

The maximum amount of work that an organization, system, or machine can produce in a given period.