Principles of Financial Accounting · free preview
Classifying Operating, Investing, and Financing Activities
Every cash flow lands in one of three sections by nature of the transaction, operations with customers and suppliers, investing with long-term assets, and financing with lenders and owners, with the classification rules sometimes surprising.
1. The classification logic
The classification logic
2. Operating activities
Operating activities
3. Investing and financing activities
Investing and financing activities
4. Noncash investing and financing
Noncash investing and financing
5. Sorting principle
Which question best sorts a cash flow into its section?
6. Interest paid placement
Under standard rules, where is interest paid on debt classified?
7. Dividends received versus paid
How are dividends received and dividends paid classified?
8. Principal repayment
A company repays 100,000 dollars of loan principal. Where does the outflow appear?
9. Noncash schedule name
Transactions like acquiring equipment by note are disclosed in the supplemental schedule of ____ investing and financing activities. One word.
10. Investing example
Buying a parcel of land for 120,000 dollars cash appears in which section? One word.
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