The three categories of cash flows are operating activities, investing activities, and financing activities. Operating activities include cash activities related to net income. Investing activities include cash activities related to noncurrent assets.

What is the statement of cash flow and what are some questions it answer?

The reporting objectives of the statement of cash flows is to provide information about important cash inflows and outflows for business decision makers. It answers specific questions such as: (1) how does a company obtain its cash? (2) Where does a compay spend its cash? (3)What is the change in the cash balance?

How are cash flows classified on the statement of cash flows?

Answer: Cash flows are classified as operating, investing, or financing activities on the statement of cash flows, depending on the nature of the transaction.

What do you mean by cash equivalents and cash flows?

Question 5. Explain the terms : Cash equivalents, Cash flows. Answer A cash flow statement shows inflows and outflows of cash and cash equivalents from various activities of an enterprise during a particular period.

What makes up cash flow from operating activities?

(i) Cash Flow from Operating Activities : These are the principal revenue producing activities of the enterprise and other activities. The cash flow statement begins with the operating activities section. Operating activities generally reflect cash generated and/or paid as a result of the firm’s core business functions.

What should be excluded from a cash flow statement?

Non-Cash Transactions: Investing and financing transactions that do not require the use of cash or cash equivalents should be excluded from a cash flow statement. Such transactions should be disclosed elsewhere in the financial statements in a way that provides all the relevant information about these investing and financing activities.