A.

Classify the given transactions as either (1) Operating, (2) Investing, (3)
Financing, or (4) No Effect in Cash

1. Opening an account under the business name and depositing cash from initial
capital contribution of the owner. (Financing)
2. Paying barangay, municipal, and other related taxes for the creation of the
business entity. (Operating)
3. Contributing land to the business. (No Effect in Cash)
4. Purchasing buildings. (Investing)
5. Purchasing computers and printers for office use. (Investing)
6. Borrowing cash from a bank for additional working capital. (Financing)
7. Purchasing office tables and chairs. (Investing)
8. Selling and distributing merchandise sold. (Operating)
9. Advertising for public exposure of goods for sale. (Operating)
10. Paid electricity and water consumption. (Operating)
11. Rendered services to customers. (Operating)
12. Paid internet subscription. (Operating)
13. Mortgaged business property to acquire a loan from the bank. (Financing)
14. Owner withdrew cash for personal use. (Financing)
15. Paid salaries of employees. (Operating)
16. Acquisition of machinery (Investing)
17. Decrease in Accounts Receivable (Operating)
18. Gain on sale - Investment (Operating)
19. Share of treasury shares (Financing)
20. Payment of dividends (Financing)

B. Write the letter corresponding to the correct answer

A OPERATING ACTIVITY - INFLOW

B OPERATING ACTIVITY - OUTFLOW
C INVESTING ACTIVITY - INFLOW
D INVESTING ACTIVITY - OUTFLOW
E FINANCING ACTIVITY - INFLOW
F FINANCING ACTIVITY - OUTFLOW

21. Purchase of various office supplies. (Operating-Outflow) B

22. Purchase of computers for office use. (Investing-Outflow) D
23. Collection from customers for services rendered. (Operating-Inflow) A
24. Withdrawal of cash by the owner. (Financing-Outflow) F
25. Paid liabilities to suppliers of office supplies. (Operating-Outflow) B
26. Interest earned on cash deposited in the bank. (Operating-Inflow) A
27. Sale of old furniture used in the office. (Investing-Inflow) C
28. Payment of employees’ salaries and wages. (Operating-Outflow) B
29. Payment of interest on the loan from the bank. (Operating-Outflow) B
30. Dividend earned on stocks of PLDT Company. (Operating-Inflow) A
31. Payment of the principal amount of bank loan. (Financing-Outflow) F
32. Payment of barangay and municipal taxes. (Operating-Outflow) B
33. Payment of electricity and water consumption. (Operating-Outflow) B
34. Additional cash investment of the owner. (Financing - Inflow) E
35. Cash donation was given to Red Cross. (Financing - Outflow) F
36. Payment of dividends (Financing - Outflow) F
37. Increase in inventory (Operating - Outflow) B
38. Cash Payment for other expenses (Operating - Outflow) B
39. Sale of machinery (Investing - Inflow) C
40. Income tax paid (Operating - Outflow) B