For each of the following, identify whether it would be disclosed as an operating, financing, or investing activity on the statement of cash flows under the indirect method. a. Received dividendsb. Paid of dividendsc. Purchase of equipmentd. Net incomee. Issued company's common stockf. Amortization expense

Answered: a. Received dividends b. Paid of…

a. Received dividends b. Paid of dividends c. Purchase of equipment d. Net income e. Issued company's common stock f. Amortization expense

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

For each of the following, identify whether it would be disclosed as an operating, financing, or investing activity on the statement of cash flows under the indirect method.

a. Received dividends
b. Paid of dividends
c. Purchase of equipment
d. Net income
e. Issued company's common stock
f. Amortization expense

Definition Definition Net amount of cash that an entity receives and expends over the course of a given period. For a business to continue operating, positive cash flows are required, and they are also necessary to produce value for investors. Investors in particular prefer to see growing cash flows even after capital expenditures have been paid for (which is known as free cash flow).

Expert Solution

Step 1

A statement of cash flows is a financial statement showing how changes in balance sheet accounts and income affect cash & cash equivalents.

cash flow statement can be prepared using two methods

1.Direct method

2. Indirect method

Step by step

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