The sale of inventory to a customer for cash is classified in the statement of cash flows as an Operating activity.

Here's why:

The statement of cash flows is divided into three sections: Operating Activities, Investing Activities, and Financing Activities.

1. Operating Activities: This section includes cash activities related to net income. For a retail corporation, selling inventory is its primary business operation, so the cash collected from these sales is considered an operating activity.

2. Investing Activities: This section includes cash activities related to noncurrent assets. It typically involves cash spent on property, plant, and equipment, or cash received from selling these items.

3. Financing Activities: This section includes cash activities related to noncurrent liabilities and owners' equity. It involves receiving cash from issuing debt or equity and paying off debt, paying dividends, or buying back previously issued stock.

4. Noncash Activities: These are significant items that do not involve cash, such as depreciation or writing off bad debt.

So, in this case, the sale of inventory to a customer for cash is an Operating activity.

Question

The sale of inventory to a customer for cash is classified in the statement of cash flows as an Operating activity.

Here's why:

The statement of cash flows is divided into three sections: Operating Activities, Investing Activities, and Financing Activities.

1. Operating Activities: This section includes cash activities related to net income. For a retail corporation, selling inventory is its primary business operation, so the cash collected from these sales is considered an operating activity.

2. Investing Activities: This section includes cash activities related to noncurrent assets. It typically involves cash spent on property, plant, and equipment, or cash received from selling these items.

3. Financing Activities: This section includes cash activities related to noncurrent liabilities and owners' equity. It involves receiving cash from issuing debt or equity and paying off debt, paying dividends, or buying back previously issued stock.

4. Noncash Activities: These are significant items that do not involve cash, such as depreciation or writing off bad debt.

So, in this case, the sale of inventory to a customer for cash is an Operating activity.

Knowee AI · Accepted Answer

The sale of inventory to a customer for cash is classified in the statement of cash flows as an Operating activity.

Here's why:

The statement of cash flows is divided into three sections: Operating Activities, Investing Activities, and Financing Activities.

1. Operating Activities: This section includes cash activities related to net income. For a retail corporation, selling inventory is its primary business operation, so the cash collected from these sales is considered an operating activity.

2. Investing Activities: This section includes cash activities related to noncurrent assets. It typically involves cash spent on property, plant, and equipment, or cash received from selling these items.

3. Financing Activities: This section includes cash activities related to noncurrent liabilities and owners' equity. It involves receiving cash from issuing debt or equity and paying off debt, paying dividends, or buying back previously issued stock.

4. Noncash Activities: These are significant items that do not involve cash, such as depreciation or writing off bad debt.

So, in this case, the sale of inventory to a customer for cash is an Operating activity.

MC Qu. 10 (LO11-1) The sale of inventory to a customer... The sale of inventory to a customer for cash is classified in the statement of cash flows as a(n): Multiple Choice Financing activity. Operating activity. Investing activity. Noncash activity.

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