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

5. Cash paid on account payable to supplier

Short answer

Accounts payable is a balance sheet item that shows the amount owed to the supplier and cash paid to the supplier will come under cash flow from operating activities.

Step-by-step solution

Definition of accounts payables

The accounts payables are defined as the amount owed by the business in exchange for assets which is payable within one accounting period.

Indication of sections

The cash paid on accounts payable to the supplies will come under cash flow from operating activities as it is related to the acquisition of goods that are later sold to customers to generate revenue. Accounts payable is also considered as the current liability which makes the payment against accounts payable as an operating activity.