In the statement of cash flows, activities are categorized into three main sections: operating activities, investing activities, and financing activities. Here’s how each of the provided line items would typically be classified:
a. Purchase of investments - Investing Activity
This involves the acquisition of financial assets or property, which falls under investing activities.
b. Disposal of equipment - Investing Activity
Selling equipment is also considered an investing activity since it involves the sale of long-term assets.
c. Payment for selling expenses - Operating Activity
This relates to regular business operations and the costs associated with selling goods or services.
d. Collection of accounts receivable - Operating Activity
This reflects cash inflows from the core operations of the business and is tied to revenue generation.
e. Cash sales - Operating Activity
This involves cash received from selling goods or services, thus representing an operating cash flow.
f. Issuance of bonds payable - Financing Activity
This represents raising funds through debt and is classified under financing activities.
Summary:
- a: Investing Activity
- b: Investing Activity
- c: Operating Activity
- d: Operating Activity
- e: Operating Activity
- f: Financing Activity