Question:
Identify and briefly describe the three categories of cash flows reported in the statement of cash flows.
Answer:
The three categories of cash flows reported on the statement of cash flows are:
1. Operating activities—Inflows and outflows of cash related to the transactions entering into the
determination of net income from operations.
2. Investing activities—Involve the acquisition and sale of (1) long-term assets used in the
business and (2) nonoperating investment assets.
3. Financing activities—Involve cash inflows and outflows from transactions with creditors and
owners.
Identify and briefly describe the three categories of cash flows reported in the statement of cash flows.
Answer:
The three categories of cash flows reported on the statement of cash flows are:
1. Operating activities—Inflows and outflows of cash related to the transactions entering into the
determination of net income from operations.
2. Investing activities—Involve the acquisition and sale of (1) long-term assets used in the
business and (2) nonoperating investment assets.
3. Financing activities—Involve cash inflows and outflows from transactions with creditors and
owners.
