Indicate How Each of the Following Events Should Be Classified

question 42

Essay

Indicate how each of the following events should be classified in a statement of cash flows for the current calendar year.Use the following code: O = operating activities,I = investing activities,and F = financing activities
Assume this company uses the direct method.If the event does not involve a cash flow that should be included in the statement of cash flows,use an X.
________ (a)Declared a dividend to be paid early next year.
________ (b)Recorded depreciation expense for the current year.
________ (c)At year-end,paid rent in advance for the next six months.
________ (d)Issued capital stock for cash;management plans to use this cash to invest in marketable securities.
________ (e)Sold a parcel of unused land at a loss.
________ (f)Collected principal amount due on a note receivable.
________ (g)Used the cash received in d,above,to purchase marketable securities.
________ (h)Collected interest due on note receivable described in f,above.
________ (i)Made an adjusting entry to accrue interest payable at year-end.
________ (j)Collected account receivable from a customer who made a large credit purchase in a prior period.
Answer: X
(a)Declared a dividend to be paid early next year.
X (b)Recorded depreciation expense for the current year.
O (c)At year-end,paid rent in advance for the next six months.
F (d)Issued capital stock for cash;management plans to use this cash to invest in marketable securities.
I (e)Sold a parcel of unused land at a loss.
I (f)Collected principal amount due on a note receivable.
I (g)Used the cash received in d,above,to purchase marketable securities.
O (h)Collected interest due on note receivable described in f,above.
X (i)Made an adjusting entry to accrue interest payable at year-end.
O (j)Collected account receivable from a customer who made a large credit purchase in a prior period.
Difficulty: 1 Easy
Topic: Cash Flows from Operating Activities;Cash Flows from Investing Activities
Learning Objecti: 13-03 Compute the major cash flows relating to operating activities. ;13-04 Compute the cash flows relating to investing and financing activities.
Bloom's: Remember
AACSB: Analytical Thinking
-Computation of operating cash flows
The financial statements of Custom Corporation provide the following information for the current year:
Using this information,compute for the current year:

---

Definitions:

Firm

A business organization, such as a corporation, partnership, or sole proprietorship, that sells goods or services in exchange for money.

Profit-Maximizing Output

The quantity of production at which a firm achieves the highest possible profit.

Total Cost

The complete financial expenditure involved in the production of goods or services, including both fixed and variable costs.

Firm

A business organization, such as a corporation, partnership, or sole proprietorship, that sells goods or services to make a profit.