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What categories of activities are reported on the statement of cash flows? Does it matter in what order these sections are presented?

a) Operating, Investing, Financing; Order is irrelevant
b) Financing, Investing, Operating; Order is irrelevant
c) Operating, Financing, Investing; Order matters
d) Investing, Operating, Financing; Order matters

User Banx
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1 Answer

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Final answer:

The statement of cash flows includes Operating, Investing, and Financing activities, and the order is typically Operating, Investing, then Financing, though this order is not mandated.

Step-by-step explanation:

The statement of cash flows reports on three categories of activities: Operating, Investing, and Financing. The correct answer to the question is a) Operating, Investing, Financing; Order is irrelevant. However, while the order in which these sections are presented is not mandated by accounting standards, there is a conventional order that is typically followed for ease of understanding and comparability. This conventional order is Operating Activities, Investing Activities, and then Financing Activities. The Operating Activities section reflects cash transactions related to the primary revenue-generating activities of the company. Investing Activities include transactions involving the purchase and sale of long-term assets and other investments. Financing Activities relate to transactions that involve raising capital and paying back investors, such as issuing debt or equity and paying dividends.

User Seamus Abshere
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