Listed Below Are Reporting Classifications for a Statement of Cash

Essay

Listed below are reporting classifications for a statement of cash flows using the indirect method for reporting operating cash flows. Indicate the reporting classification that would apply to each of the five transactions described below by placing the number of the reporting classification in the space provided by each transaction. $$\begin{array} {| l | l | l | } \hline \text { CLASSIFICATION } & \text { TRANSACTIONS } & \text { NUMBER } \\\hline \text { 1. Operating activity, no adjustment to net } & \begin{array} { l } \text { Increase in inventory } \\\text { income }\end{array} & -\\\hline \text { 2. Operating activity, negative adjustment to } & & \\ \text { net income } & \text { Payment of cash dividends. } & -\\\hline \text { 3. Financing cash outflow } & \text { Cash sales. } & -\\\hline \text { 4. Investing cash inflow } & \begin{array} { l } \text { Prepayment of an insurance } \\\text { premium for six months. }\end{array} & -\\\hline \begin{array}{l}\text { 5. Operating activity, positive adjustment to }\\\text { net income }\end{array} & \begin{array} { l } \text { Cash proceeds from sale of } \\\text { equipment. }\end{array} & -\\\hline\end{array}$$