Question

Indicate the section (O, I, or F) where each of the following transactions 1 through 8 would appear on the statement of cash flows.

O. Cash flows from operating activity

I. Cash flows from investing activity

F. Cash flows from financing activity

3. Cash paid for advertising

Short answer

The advertising expense is related to the promotion of the business and it comes under cash flows from operating activities.

Step-by-step solution

Definition of advertising expense

The advertising expense refers to that expense that covers all the costs related to promoting the product, brand, or business.

Indication of sections

The transaction will come under the operating activities. As the advertising expense incurred will help the business to increase the revenue and the transaction which helps in doing so comes under operating activities. Advertising expense is the cost incurred for generating income which makes it an operating activity.