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Listed below are several transactions. For each transaction, indicate whether the cash effect of each transaction is reported in a statement of cash flows as an operating, investing, financing, or noncash activity. Also, indicate whether the transaction is a cash inflow or cash outflow, or has no effect on cash. The first answer is provided as an example
Transaction Financing Type of Activity Cash Inflow or Outflow
1. Issuance of common stock.
2. Sale of land for cash
3. Purchase of treasury stock.
4. Collection of an account receivable
5. Issuance of a note payable
6. Purchase of inventory
7. Repayment of a note payable
8. Payment of employee salaries.
9. Sale of equipment for a notereceivable.
10. Issuance of bonds
11. Investment in bonds.
12. Payment of interest on bonds payable.
13. Payment of a cash dividend
14. Purchase of a building
15. Collection of a note receivable. Cash inflow

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Answer:

1. financing :  cash inflow

2. investing : cash inflow

3. financing : cash outflow

4. operating : cash inflow

5. financing :  cash inflow

6. operating : cash outflow

7. financing : cash outflow

8. operating : cash outflow

9. non-cash activity : no effect on cash

10. financing :  cash inflow

11.  Investing :  cash outflow

12. operating : cash outflow

13. Investing :  cash outflow

14. Investing :  cash outflow

15. investing : cash inflow

Explanation:

The Cash flow Statement reports Cash Flow from 3 sources, namely (1) Cash flow from Operating , (2) Cash flow from Financing and (3) Cash Flow from Investing Activities

Cash flow from Operating Activities - Reports cash flows arising from ordinary course of business trading. Example is collection of an account receivable.

Cash flow from Financing Activities - Reports cash flow arising from acquisitions and sale of investment or non-current assets. Example is purchase of a building.

Cash Flow from Investing Activities - Reports cash flow arising from sources of finance. Example is Issuance of bonds.

Non-cash activity - Non-cash activity have no effect on cash and are not included in Statement of Cash flow. Example is a ale of equipment for a note receivable.

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