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 3 done, 2 left today. You're making progress.