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Chapter 1: Q19E-8 (page 37)

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

8. Cash investment from shareholders

Short Answer

Expert verified

Investment is the asset acquired that will generate some income and cash invested by shareholders will come under financing activities.

Step by step solution

01

Definition of Investment

An investment is defined as an asset or any other item which is acquired with the motive of generating some income.

02

Indication of sections

The cash invested by the shareholders will come under cash flow from financing activities. The cash invested by the shareholders means the new stocks are issued and it is considered related to the finances of the company. This transaction is the issue of common stock to the owner in exchange for cash.

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Most popular questions from this chapter

Identify how each of the following separate transactions 1 through 10 affects financial statements. For increases, place a “+” and the dollar amount in the column or columns. For decreases, place a “−” and the dollar amount in the column or columns. Some cells may contain both an increase (+) and a decrease (−) along with dollar amounts. The first transaction is completed as an example.

Required a. For the balance sheet, identify how each transaction affects total assets, total liabilities, and total equity. For the income statement, identify how each transaction affects net income

1 Owner invests \(800 cash in business in exchange for stock +800 +800 +800

2 Purchases \)100 of supplies on credit

3 Buys equipment for \(400 cash

4 Provides services for \)900 cash

5 Pays \(400 cash for rent incurred

6 Incurs \)200 utilities costs on credit

7 Pays \(300 cash for wages incurred

8 Pays \)50 cash for dividends

9 Provides \(600 services on credit

10 Collects \)600 cash on accounts receivable

Question: What are some accounting-related professions?

Identify the four basic financial statements of a business.

Kyzera manufactures, markets, and sells cellular telephones. The average total assets for Kyzera is \(250,000. In its most recent year, Kyzera reported net income of \)65,000 on revenues of $475,000.

Required 4. What is the average total amount of liabilities plus equity for Kyzera?

Lita Lopez started Biz Consulting, a new business, and completed the following transactions during its first year of operations.

a. Lita Lopez invested \(70,000 cash and office equipment valued at \)10,000 in the company in exchange for its common stock.

b. The company purchased an office suite for \(40,000 cash.

c. The company purchased office equipment for \)15,000 cash.

d. The company purchased \(1,200 of office supplies and \)1,700 of office equipment on credit.

e. The company paid a local newspaper \(500 cash for printing an announcement of the office’s opening.

f. The company completed a financial plan for a client and billed that client \)2,800 for the service.

g. The company designed a financial plan for another client and immediately collected a \(4,000 cash fee.

h. The company paid \)3,275 cash in dividends to the owner (sole shareholder).

i. The company received \(1,800 cash as partial payment from the client described in transaction f.

j. The company made a partial payment of \)700 cash on the equipment purchased in transaction d.

k. The company paid $1,800 cash for the office secretary’s wages for this period.

Required 2. Determine the company’s net income.
See all solutions

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