NLIC.org

Edwin Said:

Where do the transactions affecting cash go inrelations to opearting, investing, or financing activitiy.?

We Answered:

It depends....are you doing the direct or indirect method? "Credit Purchases" means you purchased something without paying for it - no cash involved, so under the direct method, it means it doesn't go on the statement at all. If the indirect method, the increase/decrease in the account could be used to calculate the amount of cash spent, but not enough info is given here to do that. Same for credit sales - no cash involved, direct method,doesn't go on there. If it's the indirect method, Sales are already in NI, which is the starting point in the Operating section.. Div declared - not yet paid in cash, either method wouldn't be on there. Dividends paid goes in the financing section, either method. Ins Premiums is operating activity, either method.