Exercise 11-2 (Static) Determine proper classification (LO11-1) Analysis of an income statement, balance sheet, and additional information from the accounting records of Gadgets, Incorporated, reveals the following items. Required: Select the section of the statement of cash flows in which each of these items would be reported: operating activities (indirect method), investing activities, financing activities, or a separate noncash activities note. Items 1. Purchase of a patent 2. Depreciation expense. Activities 4. Issuance of a note payable. 3. Decrease in taccounts receivable. Financing activities Investing activities 5. Increase in inventory. 6. Collection of notes receivable. 7. Purchase of equipment. 8. Exchange of long-term assets. 9. Decrease in accounts payable. 10. Payment of dividends. Noncash activities Operating activities