Final answer:
The operating activities section of the statement of cash flows includes activities that affect net income, as it involves the primary revenue-generating activities such as sales and their adjustments.
Step-by-step explanation:
The section of the statement of cash flows which includes activities that affect net income on the income statement is the operating activities section. This section reports cash flows from day-to-day operations such as sales and expenses. It includes items such as cash received from customers, cash paid to suppliers, and cash spent on operating expenses.
The operating activities section reports the cash flows from the primary revenue-generating activities of a company, which are the same activities that affect net income. This includes transactions from all operational business activities both cash and non-cash items, such as depreciation, that are adjusted to reflect the actual cash effect. For instance, while net income is affected by the revenue generated from selling goods, it is the collection of cash from customers that will be shown in the operating section of the statement of cash flows. Conversely, the financing activities section records transactions related to the company's equity and debt, and the investing activities section covers the purchase and sale of long-term investments and property. The non-cash investing and financing section discloses transactions that do not involve cash.