Question

Discuss and provide examples of different types of cash flows as operating, investing, and financing activities.

Answer 1

The answer has been presented in the supporting sheet. For detailed answer refer to the supporting sheet. For detailed answer refer to the supporting sheet.

Answer There are types types of activities in cash flow statement 1. Cash Flow From Operating Activities = Cash flow from operating activities refer to the cash flow from normal bussiness operations of the company that is from day to day business operations. There are two methods for calculating it that is direct and indirect. Example of cash flow from operating activities are cash received from customers, cash paid to suppliers etc. 2. Cash Flow From Investing activities it means the flow of cash from investing activities that is from sale and purchase of investments and assets. Example of cash flow from investing activities are Cash Paid for purchase of land, Cash received from sale of machinery. 3. Cash Flow From Financing activities It means cash flow from different financing options available with the corporation like from bonds, loans, equity etc. Dividend paid to shareholders is also part of financing activities only. Examples of cash flow from financing activities are Cash paid for repayment of note payable.