Classify each of the following transactions as a cash flow from operating, investing, or financing activities, or as a supplemental disclosure. Indicate whether the transaction has a positive or negat

here are the answers to the remaining questions:

Question 12: An increase in Bonds Payable (a long-term liability).

• Issuing bonds brings in cash from lenders.
• Financing

Question 13: A decrease in the current asset account Prepaid Insurance.

• A decrease in a current asset like prepaid insurance means the expense was recognized, but no new cash was spent for that portion. This is an operating activity.
• Operating

Question 14: A decrease in the current liability Income Taxes Payable.

• A decrease in a current liability means cash was paid to reduce the liability. This is an operating activity.
• Operating

Question 15: The proceeds from issuing additional Common Stock.

• Issuing stock to investors brings in cash.
• Financing

Question 17: The amortization of the cost of an intangible asset.

• Amortization is a non-cash expense, similar to depreciation, and is adjusted in the operating section.
• Operating

Question 18: The exchange/conversion of long-term bonds into common stock.

• This transaction does not involve cash. It is a non-cash investing and financing activity.
• Supplemental

For items 19-30, we indicate whether they will have a positive or negative effect on cash.

Question 19: An increase in the balance of Prepaid Insurance.

• An increase in a current asset means cash was used to acquire it.
• Negative

Question 20: A decrease in Supplies on hand.

• A decrease in a current asset means less cash was spent than expensed, or cash was generated (e.g., from selling excess supplies). This is a positive adjustment to net income.
• Positive

Question 21: The proceeds from the sale of equipment formerly used in the business.

• Receiving proceeds means cash was collected.
• Positive

Question 22: The Loss on the Sale of Equipment in the previous question.

• A loss on sale is a non-cash expense that reduced net income but did not reduce cash. It is added back to net income in the operating section.
• Positive

Question 23: An increase in the current liability Income Taxes Payable.

• An increase in a current liability means the expense was incurred, but cash has not yet been paid. This means cash outflow was less than the expense.
• Positive

Question 24: A decrease in Accounts Payable.

• A decrease in a current liability means cash was paid to suppliers.
• Negative

Question 25: An increase in Accounts Receivable.

• An increase in a current asset means sales were made on credit, but cash has not yet been collected. This means cash inflow was less than revenue.
• Negative

Question 26: An increase in the current liability Warranty Liability.

• An increase in a current liability means the expense was incurred, but cash has not yet been paid for warranty claims. This means cash outflow was less than the expense.
• Positive

Question 27: Dividends declared and paid.

• Paying dividends is a direct outflow of cash.
• Negative