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Indicate the Reporting Classification That Would Apply to Each of the Following

Question 8

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Indicate the reporting classification that would apply to each of the following transactions

Premises:

Responses:

Acquisition of equipment by issuing bonds payable.

Investing cash outflow

Repayment of long-term debt by issuing preferred stock.

Noncash financing and investing activity

Interest received on trading securities.

Financing cash outflow

Cash sale of a patent at book value.

Investing cash inflow

Loan of cash to a supplier in exchange for a six-month note receivable.

Operating cash inflow

Premises:

Acquisition of equipment by issuing bonds payable.

Repayment of long-term debt by issuing preferred stock.

Interest received on trading securities.

Cash sale of a patent at book value.

Loan of cash to a supplier in exchange for a six-month note receivable.

Responses:

Investing cash outflow

Noncash financing and investing activity

Financing cash outflow

Investing cash inflow

Operating cash inflow

Correct Answer:

Premises:

Responses:

Acquisition of equipment by issuing bonds payable.

Repayment of long-term debt by issuing preferred stock.

Interest received on trading securities.

Cash sale of a patent at book value.

Loan of cash to a supplier in exchange for a six-month note receivable.