Question: Assuming that Sonic Company uses the indirect method for the statement of cash flows, an activity may be classified into the categories as follows: Operating

Assuming that Sonic Company uses the indirect method for the statement of cash flows, an activity may be classified into the categories as follows:

  1. Operating activity add to net income
  2. Operating activity subtract from net income
  3. Investing activity cash inflow
  4. Investing activity cash outflow
  5. Financing activity cash inflow
  6. Financing activity cash outflow
  7. Noncash transaction

Purchase of another company's common shares should be reported as:

A. Financing activity cash outflow.

B. Investing activity cash outflow.

C. Investing activity cash inflow.

D. Operating activity subtract from net income.

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