Final answer:
Payments for the acquisition of inventory are reported as an operating activity on the cash flow statement, which reflects a company's day-to-day business operations and its liquidity status.
Step-by-step explanation:
The payment for the acquisition of inventory is shown on a cash flow statement as a c) operating activity. The cash flow statement is broken down into three parts: operating, investing, and financing activities. The acquisition of inventory is considered part of the day-to-day operations of a business, as inventory purchase is necessary for the business to produce goods or provide services that generate revenue.
Therefore, when payments are made to acquire inventory, they are categorized under operating activities on the cash flow statement. This is distinct from investing activities, which typically involve the purchase and sale of long-term assets and investments, and financing activities, which include transactions related to debt, equity, and dividends.
Moreover, the cash flow statement reflects the inflows and outflows of cash and cash equivalents during a specific period, which makes it a critical financial document for understanding a company's liquidity.