The statement of cash flows classifies cash receipts and cash payments by these activities: (a).

The statement of cash flows classifies cash receipts and cash payments by these activities: (a).

The statement of cash flows classifies cash receipts and cash payments by these activities: (a) operating and non operating. (b) operating, investing, and financing. (c) financing, operating, and non operating. (d) investing, financing, and non operating.

Cash Flow Statement:

The cash flows statements are prepared in order to record all the cash recorded operations carried out in an organization. These keep a record of all the inflows and outflow of cash. It gives a position of business carries it cash operations in an organization.

Answer and Explanation: 1

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Option B is the correct option. The cash flow statements act as a basis for income statement and balance sheet. The classification of cash flows: Op.

Cash Flows from Operating, Investing, and Financing Activities

The cash flow statement gives information on a company’s cash receipts and payments during a specified period of time. This information can help users of financial statements (creditors, investors, analysts, etc.) evaluate a company’s liquidity and solvency.

Components of the Cash Flow Statement

There are three components of the Cash Flow Statement:

• Cash Flow from Operating Activities: this provides information on cash flows that are derived from the day-to-day activities of a company. Among others, these cash flows include proceeds from the sale of inventory, and from the provision of services or other activities that are not related to financing or investing. Further, cash flows from operating activities also include cash receipts and payments arising from dealing or trading in securities (not for investment purposes);

• Cash Flow from Investing Activities: this provides information on cash flows that are derived from the purchase and sale of long-term assets and other investments. Such ventures include the purchase or sale of property, plant, and equipment, intangible assets, and investments in the debt and equity issued by other companies; and

• Cash Flow from Financing Activities: this provides information on cash flows that are derived from acquiring or repaying capital. Cash inflows would arise from the issuance of stock or bonds and borrowing, while cash outflows would include cash payments for repurchasing stock and repaying bonds or other borrowings.

Question 1

1. Proceeds from the issuance of bonds.
2. Proceeds from the sale of machinery.
3. Cash received from the sale of inventory.

Question 2

1. Both are operating cash flows.
2. Investing cash flow; and operating cash flow.
3. Operating cash flow; and investing cash flow.

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