What are the three main parts of the Statement of Cash Flows?

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Study for the Texas Aandamp;M University (TAMU) ACCT229 Exam. Get exam-ready with flashcards, detailed explanations, and multiple choice questions. Enhance your understanding and boost your confidence!

The Statement of Cash Flows is designed to provide information about a company's cash inflows and outflows during a specific period. The three main parts of this statement are categorized as Operating, Investing, and Financing activities.

Operating activities represent the cash flows from the core business operations, including cash received from customers and cash paid to suppliers and employees. This section provides insight into how well a company generates cash from its regular business activities.

Investing activities include cash transactions for the purchase and sale of physical and financial investments. This would cover cash spent on acquiring fixed assets or investments in other companies, which are significant for understanding how a company manages its long-term investments.

Financing activities reflect cash flows related to borrowing and repaying debts, issuing stocks, or paying dividends to shareholders. This part highlights how a company finances its operations and growth through debt and equity.

Together, these three sections allow stakeholders to assess how a company manages its cash, illustrating the overall cash-generating capability and liquidity position. The other options do not encompass the broad categories defined in the Statement of Cash Flows, as they either focus on specific components or mischaracterize the nature of cash activities.