Depreciation Expense

Here are the classifications for each item on the Cash Flow Statement:

1. Depreciation Expense

• Depreciation is a non-cash expense that is added back to net income under the indirect method.
• Operating

2. Proceeds from the sale of equipment used in the business.

• The sale of a long-term asset like equipment is an investing activity.
• Investing

3. The Loss on the Sale of Equipment in Question #2

• A loss on the sale of an asset is a non-cash item that is added back to net income under the indirect method.
• Operating

4. Declaration and payment of dividends on company's stock.

• Paying dividends to shareholders is a financing activity.
• Financing

5. Gain on the Sale of Automobile formerly used in the business.

• A gain on the sale of an asset is a non-cash item that is subtracted from net income under the indirect method.
• Operating

6. The proceeds from the sale of the automobile in item #5.

• The sale of a long-term asset like an automobile is an investing activity.
• Investing

7. An increase in the balance in a retailer's Merchandise Inventory.

• An increase in a current asset like inventory is a use of cash from operating activities.
• Operating

8. An increase in the balance in Accounts Payable.

• An increase in a current liability like accounts payable is a source of cash from operating activities.
• Operating

9. Retirement of long-term Bonds Payable.

• Paying off long-term debt is a financing activity.
• Financing

10. Purchase of Treasury Stock (company's own stock).

• Repurchasing a company's own stock is a financing activity.
• Financing

11. The purchase of a new delivery truck to be used in the business.

• The purchase of a long-term asset like a delivery truck is an investing activity.
• Investing

12. A decrease in the balance of Accounts Receivable.

• A decrease in a current asset like accounts receivable is a source of cash from operating activities.
• Operating