Question

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

b. For the statement of cash flows, identify how each transaction affects cash flows from operating activities, cash flows from investing activities, and cash flows from financing activities.

Transaction Statement of cash flow

1 Owner invests \(900 cash in business in exchange for stock +900 +900 +900

2 Receives \)700 cash for services provided

3 Pays \(500 cash for employee wages

4 Incurs \)100 legal costs on credit

5 Purchases \(200 of supplies on credit

6 Buys equipment for \)300 cash

7 Pays \(200 on accounts payable

8 Provides \)400 services on credit

9 Pays \(50 cash for dividends

10 Collects \)400 cash on accounts receivable

Short answer

Operating activities are related to the research and selling and the required table for the cash flow statement is prepared.

Step-by-step solution

Definition of operating activities

Operating activities are defined as the activities which include all the transactions related to the revenue generation and expenses paid.

Changes in the balance sheet and income statement