Which of the following describes the operating activities section of the statement of cash flows?
A) It reports cash receipts and cash payments that increase or decrease long-term assets.
B) It includes cash inflows and outflows related to long-term liabilities and equity.
C) It reports on activities that create revenue or expenses for the entity's business.
D) It reports on how cash flows affect the total assets and total liabilities.

Question

Quizplus · Accepted Answer

The operating activities section of the statement of cash flows reports on the cash inflows and outflows related to the entity's main business operations, which create revenue or expenses. This section does not include cash flows related to long-term assets or liabilities and equity, which are reported in the investing and financing activities sections, respectively. The operating activities section also does not directly report on how cash flows affect the total assets and liabilities, but it can indirectly impact these items through changes in net income and working capital.

Which of the Following Describes the Operating Activities Section of the Statement