Understanding Cash Flow Statement: Categories and Presentation

The video tutorial introduces the concept of cash flow statements, focusing on three main categories: operating, investing, and financing activities. It explains each category in detail, providing examples and their significance in financial statements. The tutorial also includes a section on classifying items from balance sheets and income statements into these categories. The session concludes with multiple choice questions to reinforce learning and a preview of upcoming topics on cash flow statement preparation methods.

How many main categories are there in a cash flow statement?

• Five

• Four

• Three

• Two

Which activity involves transactions related to the income statement?

• Operating Activities

• Investing Activities

• None of the above

• Financing Activities

What type of transaction is the purchase of machinery?

• Operating Activity

• None of the above

• Investing Activity

• Financing Activity

What type of transaction is the sale of an investment?

• Financing Activity

• None of the above

• Operating Activity

• Investing Activity

Which activity involves the acquisition and disposal of long-term assets?

• None of the above

• Operating Activity

• Investing Activity

• Financing Activity

Issuing new equity shares is an example of which type of cash flow activity?

• Financing Activity

• None of the above

• Operating Activity

• Investing Activity

Which of the following is not a financing activity?

• Purchasing machinery

• Buying back shares

• Raising a loan

• Issuing shares

Which activity involves changes in the size and composition of owner's capital?

• Operating Activity

• Investing Activity

• Financing Activity

• None of the above

Which of the following is an example of an operating activity?

• Sale of goods

• Purchase of machinery

• Issuing shares

• Raising a loan

What type of transaction is paying salaries to employees?

• Financing Activity

• None of the above

• Investing Activity

• Operating Activity