For the item below, determine whether the amount would be disclosed in the cash flow statement under: Operating (CFO), Investing (CFI), or Financing (CFF), as well as if would be a net increase (+) or decrease (-) in cash or cash equivalents: A. Principal payments on long-term borrowings B. Decrease in accounts receivable C. Proceeds from long-term borrowings D. Increase in deferred income tax net liability E. Net earnings F. Increase in prepaid expenses G. Increase in merchandise inventories H. Cash dividends paid I. Proceeds from issuance of common stock J. Increase in accrued salaries, wages, and related benefits K. Payments for repurchase of common stock L. Capital Expenditures M. Increase in accounts payable N. Depreciation and amortization expenses

Below is the classification of each item in the Cash Flow Statement (CFS):

A. Principal payments on long-term borrowings - Financing (CFF), Decrease (-) B. Decrease in accounts receivable - Operating (CFO), Increase (+) C. Proceeds from long-term borrowings - Financing (CFF), Increase (+) D. Increase in deferred income tax net liability - Operating (CFO), Increase (+) E. Net earnings - Not directly disclosed in CFS (but affects CFO indirectly) F. Increase in prepaid expenses - Operating (CFO), Decrease (-) G. Increase in merchandise inventories - Operating (CFO), Decrease (-) H. Cash dividends paid - Financing (CFF), Decrease (-) I. Proceeds from issuance of common stock - Financing (CFF), Increase (+) J. Increase in accrued salaries, wages, and related benefits - Operating (CFO), Increase (+) K. Payments for repurchase of common stock - Financing (CFF), Decrease (-) L. Capital Expenditures - Investing (CFI), Decrease (-) M. Increase in accounts payable - Operating (CFO), Increase (+) N. Depreciation and amortization expenses - Operating (CFO), Add-back to net earnings (non-cash)

Extra: The Cash Flow Statement is an essential financial statement that shows how changes in balance sheet accounts and income affect cash and cash equivalents. This statement breaks down the cash inflows and outflows into three categories:

1. Operating Activities (CFO) - This section includes transactions that relate to the primary operations of the business. Generally, changes in working capital such as accounts receivable, prepaid expenses, inventories, and accounts payable are recorded here. Also, non-cash expenses like depreciation and amortization are added back to net income, since they are not actual cash expenditures.

2. Investing Activities (CFI) - These activities include transactions involving the purchase and sale of long-term assets like property, plant, and equipment (capital expenditures), and investments in securities (except for those intended to be traded shortly).

3. Financing Activities (CFF) - This section reflects transactions related to changes in equity and borrowings of the company. Here, you would find activities such as the issuance and repurchase of stocks, borrowing and repayment of debt, and payment of dividends.

For each transaction, the effect on cash can be an increase or a decrease. Items that increase cash or cash equivalents are noted with a plus sign (+), while items that decrease cash or cash equivalents are noted with a minus sign (-). Certain non-cash items are accounted for in the operating activities to reconcile net income to cash generated from operating activities.