Graded Assignment Attempts Keep the Highest: 16 Aa Aa E 3. Statement of cash flows 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 Under the indirect method, an increase in an asset account (exduding the cash and cash equivalent account) reflects (or results in) a cash and a decrease in a liability or equity account represents and gives rise to a cash A firm engages in a variety of activities that generate 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 During the year, Talledaga Trucking Co. paid off Fresno Furniture Manufacturing Inc. sold its old $337,000 of its accounts payable. computer system for $70,000. This transaction is classified as 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 During the year, Talledaga Trucking Co. relocated its corporate headquarters and purchased Q O a new office building. This month, Collins Construction Co. collected $87,458 n accounts receivable