Indicate where each item should be presented in the statement of cash flows (indirect method) using these four major classifications:
operating activity (that is, the item would be listed among the adjustments to net income to determine net cash provided by operating activities under the indirect method), investing activity, financing activity, or significant noncash investing and financing activity.

a) payment of interest on notes payable.
b) exchange of land for patent.
c) sale of building at book value.
d) payment of dividends.
e) depreciation.
f) receipt of dividends on investment in stock.
g) receipt of interest on notes receivable.
h) issuance of capital stock.
i) amortization of patent.
j) issuance of bonds for land.
k) purchase of land.
l) conversion of bonds into common stock.
m) loss on sale of land.
n) retirement of bonds.

Explanation:

Basically there are three types of activities:

1. Operating activities: It includes those transactions which affect the working capital, and it records transactions of cash receipts and cash payments.  It also includes depreciation expense, dividend received,interest payment and interest received on the note payable and the notes receivable, loss or gain on the disposal of the assets

2. Investing activities: It records those activities which include purchase and sale of the long term assets

3. Financing activities: It records those activities which affect the long term liability and shareholder equity balance.  

So, the categorization is shown below:

a) Payment of interest on notes payable - Operating activity

b) Exchange of land for patent. - non-cash investing and financing activity as it does not involve any cash transactions

c) Sale of building at book value - Investing activity

d) Payment of dividends - financing activity

e) Depreciation - Operating activity

f) Receipt of dividends on investment in stock - Operating activity

g) Receipt of interest on notes receivable - Operating activity

h) Issuance of capital stock - Financing activity

i) Amortization of patent  - Operating activity

j) Issuance of bonds for land - non-cash investing and financing activity as it does not involve any cash transactions

k) Purchase of land - Investing activity

l) Conversion of bonds into common stock  - non-cash investing and financing activity as it does not involve any cash transaction

m) Loss on sale of land  - Operating activity

n) Retirement of bond - financing activity

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