Which are the three sections of a cash flow statement?

Which are the three sections of a cash flow statement?

• A. Revenue, expenses, and net income.
• B. Operating activities, investing activities, financing activities.
• C. Assets, liabilities, and equity.
• D. Cash on hand, cash equivalents, and marketable securities.

Answer: (B)

The main idea is that a cash flow statement organizes cash movements into three activities: operating activities, investing activities, and financing activities. Operating activities reflect the cash generated or used by the core business—cash receipts from customers and cash payments to suppliers, employees, and others. Investing activities show cash spent on or received from buying and selling long-term assets like equipment or investments. Financing activities capture cash effects of borrowing, repaying debt, issuing stock, and paying dividends, which relate to how the company funds its operations and growth. These three sections together reveal how cash is created and utilized, separate from reported profits. The other options describe items from other financial statements or components of cash itself, not the three sections of the cash flow statement.

The main idea is that a cash flow statement organizes cash movements into three activities: operating activities, investing activities, and financing activities. Operating activities reflect the cash generated or used by the core business—cash receipts from customers and cash payments to suppliers, employees, and others. Investing activities show cash spent on or received from buying and selling long-term assets like equipment or investments. Financing activities capture cash effects of borrowing, repaying debt, issuing stock, and paying dividends, which relate to how the company funds its operations and growth. These three sections together reveal how cash is created and utilized, separate from reported profits. The other options describe items from other financial statements or components of cash itself, not the three sections of the cash flow statement.