Question

chapter 12: Reporting Cash Flows

Distinguish between operating, investing, and financing activities, and describe how noncash investing and financing activities are disclosed.

Knowledge Check 04

The following transactions and events occurred during the year. Indicate how each transaction would appear on its statement of cash flows by selecting an appropriate category.

Borrowed cash from bank by signing a long-term note payable.

Paid cash to purchase long-term investment securities.
Paid employees for salaries and wages.
Paid interest on bonds payable.

for each statement above, it is either appropriately go with either financial, investing, operating activity, or noncash investing & financing activity.

Answer 1

Borrowed cash from bank by signing a long-term note payable	Financing Activity
Paid cash to purchase long-term investment securities.	Investing Activities
Paid employees for salaries and wages	Operating Activities
Paid interest on bonds payable.	Operating Activities

Explanation:

1)Non Current Asset related all the transactions are reported under investing activities. ( puqchase or sale of long term assets)

2) Proceeds from bank, common stock, common stock div, are reported under financing activities.

3) Activities related to day to day transactions are reported under operating activities.