Rolling Hills Corporation is preparing its statement of cash flows (indirect method) for the past year. Listed below are items used in preparing the company's statement of cash flows. Specify how each item would be treated on Rolling Hills Corporation's statement of cash flows by using the following abbreviations:
1. Operating activity-addition to net income (O+)
2. Operating activity-subtraction from net income (O-)
3. Financing activity (F)
4. Investing activity (I)
5. Activity that is not on the statement of cash flows (NA)

Transcribed Image Text:

Items to Classify in Operating Section of Statement of Cash Flows (Indirect Method) a. Depreciation expense b. Retained earnings c Increase in prepaid expense d. Loss on sale of building e. Payment of dividends . ncrease in accounts receivable h. Decrease in inventory i. Decrease in accounts payable j. Collection of cash from customers k. Gain on sale of land L. Issuance of common stock m. Purchase of equipment n. Increase in accrued liabilities