Evaluate the following conventions in preparing a statement of cash flows:
a. Dividend payments to shareholders are reported as a financing activity, and interest payments on debt are reported as an operating activity.
b. Purchases of inventory are operating activities, but purchases of plant and equipment are investing activities.
c. Accounts payable transactions are operating activities, but most other liability transactions are treated as financing activities.
5 15 In each of the following cases, indicate whether the amount of cash inflow (or outflow) is greater or less than the related revenue (or expense):
a. A firm’s accounts receivable balance has increased during the period.
b. A firm’s salaries payable balance has increased during the period.
c. A firm’s accumulated depreciation balance has increased during the period.
d. A firm’s inventory balance has increased during the period, and the supplier accounts payable balance has also increased by a greater amount.