Question

Indicate on the blanks below the letter of the type of activity (O = operating activity, F = financing activity, I = investing activity, N = noncash transaction) each of the following transactions represents. If a transaction is N – Noncash it is ONLY noncash.

______ a. Bought land and buildings by taking out a long-term mortgage payable

______ b. Declared and paid cash dividends

______ c. Received interest income in cash

______ d. Collected on Accounts Receivable in cash

______ e. Paid off long-term debt with cash

______ f. Purchased equipment with cash

Answer 1

No.	Items	Type of Activity
a	Bought land and buildings by takings out a long - term mortgage payable	N
b	Declared and paid cash Dividends	F
c	Received Interest Income in Cash	I
d	Collect on Account receivable in cash	O
e	Paid off long term debt with cash	F
f	Purchased Equipment with cash	I

Explanation:

Purchase of land and building by taking out a long term debt , this transaction doesn't involve any cash so it it non cash item.

Every item which is related to capital and liabilities are shown under financing Activities as well paid off long term debt is also financing Activities.

Interest income is received upon investment that's why it is shown under Investing Activities.

Collected on Account Receivable is operating Activities.

Fixed Asset purchase is shown under investing Activities.