Final answer:
The statement of cash flows is divided into Operating, Investing, and Financing activities, with cash paid to employees and received from customers being Operating, cash used to buy or received from selling equipment being Investing, and dividends paid and cash borrowed being Financing activities.
Step-by-step explanation:
Items in a statement of cash flows can be classified into three categories: Operating, Financing, or Investing activities, each reflecting a different type of cash flow within the business. Here is the classification of the given items:
- Operating activities: a. Cash paid to employees and suppliers; d. Cash received from customers
- Investing activities: b. Cash used to buy equipment and software; e. Cash received from selling equipment
- Financing activities: c. Cash dividends paid to stockholders; f. Cash borrowed from the bank
These classifications align with how firms raise financial capital, including early-stage investors, reinvesting profits, borrowing through banks or bonds, and selling stock, all of which affect the firm's financial strategy and its cash flow structure.