Classify each of the following transactions for the purpose of the statement of cash flow as operating activities (OA), investing activities (IA), financing activities (FA), or not reported on the statement of cash flows (NA).1) ________ Sold land2) ________ Provided consulting services on account3) ________ Borrowed funds from the bank4) ________ Paid rent in advance for the next six months5) ________ Paid cash to settle accrued salary expense6) ________ Purchased supplies on account7) ________ Collected accounts receivable
What will be an ideal response?
1) IA 2) NA 3) FA 4) OA 5) OA 6) NA 7) OA
1) Purchasing and selling long-lived assets is an investing activity
2) Because cash was not collected or paid, the statement of cash flows is not affected
3) Borrowing cash is a financing activity
4) Paying rent, including paying in advance, is an operating activity
5) Paying salaries is an operating activity
6) Making purchases on account does not affect cash flows
7) Collecting cash from customers is an operating activity
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