The cash flow statement presents cash inflows and outflows from which activities?

• A. Operating activities only
• B. Financing activities only
• C. Operating, investing, and financing activities
• D. Non-cash activities only

Answer: (C)

The cash flow statement shows how cash moves through a business by breaking inflows and outflows into three activity areas. First, operating activities capture the cash effects of the company’s core business operations—cash received from customers and cash paid to suppliers, employees, and for taxes. Next, investing activities reflect purchases and sales of long-term assets and investments, such as equipment, property, or securities. Finally, financing activities track cash movements related to financing the business—borrowing and repaying debt, issuing stock, and paying dividends. Non-cash investing or financing activities are disclosed separately and do not appear in the main cash flow categories. Since the statement covers cash changes across all three areas, that is why it presents cash inflows and outflows from operating, investing, and financing activities.