The three categories of a cash flow statement are:

1. Operating Activities: This category includes the cash effects of transactions that create revenues and expenses. They thus enter into the determination of net income. Examples of such activities are cash received from customers, cash paid to suppliers and employees, interest received or paid, and taxes paid.

2. Investing Activities: This category includes acquiring and disposing of investments and productive long-lived assets using cash and lending money and collecting the loans. Examples of such activities are purchase or sale of plant, property, and equipment; purchase or sale of equity or debt instruments of other entities (except cash equivalents and certain instruments those held for trading purposes).

3. Financing Activities: This category includes obtaining resources from owners and providing them with a return on, and a return of, their investment; borrowing money from creditors and repaying the amounts borrowed. Examples of such activities are cash proceeds from issuing shares or debt, repayments of amounts borrowed, or dividends paid to shareholders.

Each of these categories provides valuable information to users of financial statements about different aspects of a company's cash flow.

Question

The three categories of a cash flow statement are:

1. Operating Activities: This category includes the cash effects of transactions that create revenues and expenses. They thus enter into the determination of net income. Examples of such activities are cash received from customers, cash paid to suppliers and employees, interest received or paid, and taxes paid.

2. Investing Activities: This category includes acquiring and disposing of investments and productive long-lived assets using cash and lending money and collecting the loans. Examples of such activities are purchase or sale of plant, property, and equipment; purchase or sale of equity or debt instruments of other entities (except cash equivalents and certain instruments those held for trading purposes).

3. Financing Activities: This category includes obtaining resources from owners and providing them with a return on, and a return of, their investment; borrowing money from creditors and repaying the amounts borrowed. Examples of such activities are cash proceeds from issuing shares or debt, repayments of amounts borrowed, or dividends paid to shareholders.

Each of these categories provides valuable information to users of financial statements about different aspects of a company's cash flow.

Knowee AI · Accepted Answer

The three categories of a cash flow statement are:

1. Operating Activities: This category includes the cash effects of transactions that create revenues and expenses. They thus enter into the determination of net income. Examples of such activities are cash received from customers, cash paid to suppliers and employees, interest received or paid, and taxes paid.

2. Investing Activities: This category includes acquiring and disposing of investments and productive long-lived assets using cash and lending money and collecting the loans. Examples of such activities are purchase or sale of plant, property, and equipment; purchase or sale of equity or debt instruments of other entities (except cash equivalents and certain instruments those held for trading purposes).

3. Financing Activities: This category includes obtaining resources from owners and providing them with a return on, and a return of, their investment; borrowing money from creditors and repaying the amounts borrowed. Examples of such activities are cash proceeds from issuing shares or debt, repayments of amounts borrowed, or dividends paid to shareholders.

Each of these categories provides valuable information to users of financial statements about different aspects of a company's cash flow.

Name the three categories of a cash flow statement? Give an example of activities to be included in each of them? (6 Marks)

Question

Solution

Similar Questions

Upgrade your grade with Knowee