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 a statement of cash flows, which of the following activities is classified as an investing activity?

Payment of dividends

Payment of salaries

Issuance of common stock

Purchase of equipment

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Understand the classification of activities in a statement of cash flows: Operating activities involve day-to-day business operations, financing activities involve transactions related to equity and debt, and investing activities involve the acquisition or disposal of long-term assets.

Identify the nature of the activity described in the problem: 'Purchase of equipment' involves acquiring a long-term asset, which is typically classified as an investing activity.

Compare the other options provided: Payment of dividends is a financing activity, payment of salaries is an operating activity, and issuance of common stock is also a financing activity.

Recognize that investing activities specifically include transactions such as purchasing or selling property, plant, and equipment, as well as investments in securities.

Conclude that the correct classification for 'Purchase of equipment' is an investing activity, as it aligns with the definition of acquiring long-term assets.