. Chapter 2 Assignment The statement of cash flows categorizes a firm's cash flows according to the nature of the activities that give rise to them (for example, operating, investing, and financing cash flows) and then further differentiates these activities and cash flows into whether they involve sources and uses of cash. Two methods can be used to construct a statement of cash flows: the direct method and the Indirect method. Under the Indirect method, data from three financial statements are used. These statements include one statement of cash flows and one income statement A firm engages in a variety of activities that generate cash and require cash payment. The boxes below describe examples of these activities. Classify each transaction as to whether it constitutes an operating an investing, or a financing cash flow. 2 Tomorrow, Collins Construction Co. will pay cash dividends of $55,000 to its preferred stockholders. This transaction is classified as + Tomorrow, Fresno Furniture Manufacturing Inc, will close on the sale of its old office building. It is expected to receive $1,25 million for the building net of the sales commission. This transaction is classified as A firm engages in a variety of activities that generate and require cash payment. The boxes below describe two examples of these activities. Classify each transaction according to its serving as a source of cash to the firm (cash inflow) or a use of cash (cash outflow). Situation Source Use Last month, Collins Construction Co. purchased $23,452 worth of office supplies on credit. Talledega Trucking Co. paid $450,000 in dividends on its 2.50 million common shares outstanding Grade It Now Save & Continue Continue without saving