Question

Classification of Cash Flows:

Foster Company reported the following items in its statement of cash flows presented using the indirect method.
Required:
1. Indicate whether each item should be classified as a cash flow from operating activities, a cash flow from investing activities, or a cash flow from financing activities.
a. Interest paid on long-term note payable
b. Proceeds from sale of building
c. Increase in accounts payable
d. Increase in retained earnings
e. Cash dividend paid to stockholders
f. Taxes paid to the federal government

Answer 1

Please see the classification below:

Step-by-step explanation:

Cash flow from operating activities

a. Interest paid on long-term note payable

c. Increase in accounts payable

f. Taxes paid to the federal government

Cash flow from investing activities

b. Proceeds from sale of building

Cash flow from financing activities

e. Cash dividend paid to stockholders