Question

In a statement of cash flows: Multiple Choice Operating activities can be reported by either the direct method or the operating method. One of the three primary reporting classifications of cash flows is financing activities. Investing activities can be reported by either the direct method or the indirect method. Financing activities can be reported by either the direct method or the financing method.

Answer 1

Answer: One of the three primary reporting classifications of cash flows is financing activities.

Explanation: In simple words, cash flow statement refers to the financial statement in which a company depicts its sources and uses of cash over a certain period of item, generally for an year.

In a cash flow statement, the company categorizes its activities into three groups. First is operating activities in which all the transactions related to core activities are reported.

Second is financial activities in which transactions related to equity and bond holders are recorded. Third is investing activities recording transactions related to fixed assets.