Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

13. Statement of Cash Flows

Introduction to the Statement of Cash Flows

Financial Accounting

13. Statement of Cash Flows

Introduction to the Statement of Cash Flows

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Multiple Choice

In preparing a company's statement of cash flows, which of the following activities is classified as an investing activity?

Purchasing equipment for cash

Issuing common stock

Paying salaries to employees

Paying dividends to shareholders

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Verified step by step guidance

Understand the classification of cash flow activities: Cash flows are categorized into operating, investing, and financing activities. Investing activities generally involve transactions related to the acquisition or disposal of long-term assets and investments.

Review the definition of investing activities: These include cash transactions for purchasing or selling property, plant, equipment, or investments. The focus is on activities that affect the company's long-term resources.

Analyze the options provided: Purchasing equipment for cash involves acquiring a long-term asset, which is classified as an investing activity. Issuing common stock, paying salaries, and paying dividends are not related to the acquisition or disposal of long-term assets.

Classify the other options: Issuing common stock is a financing activity because it involves raising capital. Paying salaries is an operating activity as it relates to day-to-day business operations. Paying dividends is also a financing activity as it involves returning profits to shareholders.

Conclude the correct classification: Purchasing equipment for cash is the activity that fits the definition of an investing activity, as it involves the acquisition of a long-term asset.