Question

A statement of cash flows classifies cash receipts and cash payments into what three categories of activity? For each category of activity, share two specific examples of both cash receipts and cash payments based on two different business scenarios of your choosing. The business scenarios you choose can be based on real or fictional companies. For example, if you chose Uber and the fictional MarksABunch Art Supplies company, you would share six examples of cash receipts and cash payments per company, each broken out into one of the three different categories of activity presented in a statement of cash flows.

Answer 1

The statement of cash flows classifies cash receipts and payments into three categories which are operating, investing and financing. Operating “include cash activities related to net income” (3 types of cash) An example of this is cash generated from the sales as well as cash paid for merchandising. Investing is “include cash activities related to non-current assets” (3 types of cash).An example of this is long term investments as well as property, plant and equipment. Financing activities “include cash activities related to non-current liabilities and owners’ equity” (3 types of cash). An example of this is stock sales and repurchases as well as dividend payments. For two types of companies that I am choosing are Nike as well as uber. When Nike purchases inventory it would be under investing. When they obtain cash from their creditors it would be financing and when they receive interest on loans it would be operating. Now for Uber it would be financing when they sale equity securities. The operating could be when they pay taxes to the government and when they are investing it could be to purchase property.