Determine proper classification (LO11-1) Analysis of an income statement, balance sheet, and additional information from the accounting records of Gadgets, Inc., reveals the following items. Required: Select the section of the statement of cash flows in which each of these items would be reported: operating activities (indirect method), investing activities, financing activities, or a separate noncash activities note.
1. Purchase of a patent.
2. Depreciation expense
3. Issuance of a note payable
4. Increase in inventory
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