6. Categorizing cash flows Aa Aa E In addition to recognizing what type of activity transactions are being described, it is important to recognize whether a transaction involves a source or use of cash, or whether it should be classified as an operating, investing, or financing cash flow. In the following table, determine whether each transaction should be classified as generating a cash inflow (source of funds) or outflow (use of cash), and whether it should be recorded as an operating, investing, or financing cash flow. Operating, Investing, or Financing Cash Flow Cash Inflow or Outflow Transaction Williamson Co. issued new common stock for $317,000. Armstrong Inc. purchased equipment for $39,000. Sherman Co. paid preferred dividends of $36,000. Howard Co. incurred total operating expenses of $834,000 and total cash payments for expenses that equaled $781,000