The Statement of Cash Flows: Key Concepts and Sections

B

Operating, investing and financing are the 3 activities depicted on that statement of cash flows.

The statement of cash flows is a financial statement that presents the sources and uses of cash during a specific period. It provides information about the cash inflows and outflows related to a company's operating, investing, and financing activities. The statement of cash flows typically consists of three sections: operating activities, investing activities, and financing activities.

1. Operating Activities: This section focuses on the cash flows generated from a company's primary operations. It includes cash receipts and payments related to the production and delivery of goods or services. Examples of cash inflows from operating activities include cash received from customers, interest received, and dividends received. Cash outflows in this section include cash payments to suppliers, employees, and other operating expenses.

2. Investing Activities: This section reports the cash flows from the acquisition and disposal of long-term assets and other investments not classified as cash equivalents. It includes cash inflows from the sale of property, plant, and equipment, as well as the collection of principal on loans made to other entities. Cash outflows in this section typically involve the purchase of property, plant, and equipment, investments in other entities, and loans made to other entities.

3. Financing Activities: This section focuses on the cash flows related to the financing of the company's operations and capital structure. It includes cash inflows from issuing equity securities (such as common stock) and borrowing funds (such as loans or issuing bonds). Cash outflows in this section typically involve repaying borrowed funds, paying dividends to shareholders, and purchasing treasury stock.

Based on the options provided, the statement of cash flows includes sections on financing activities, investing activities, and operating activities. Therefore, the correct answer is B. purchasing activities. Purchasing activities is not a standard section in the statement of cash flows. While the statement of cash flows may disclose cash payments for the purchase of assets or goods, it is usually included within the operating activities or investing activities sections depending on the nature of the purchase.