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Crater HVAC Systems is preparing its statement of cash flows (indirect method) for the year ended March 31, 2018. To follow, in no particular order, is a list of items that will be used in preparing the company’s statement of cash flows. Identify each item as an operating activity addition to net income; an operating activity subtraction from net income; an investing activity; a financing activity; or an activity that is not used to prepare the cash flows statement.
a. Increase in inventory
b. Issuance of common stock
c. Decrease in accrued liabilities
d. Net income
e. Decrease in prepaid expense
f. Collection of cash from customers
g. Purchase of equipment with cash
h. Retained earnings
i. Payment of dividends
j. Increase in accounts payable
k. Decrease in accounts receivable
l. Gain on sale of a building
m. Loss on sale of land
n. Depreciation expense
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