(Note that interest received from loans is included in operating activities.) For example, cash generated from the sale of land and cash paid for an investment in another company are included in this category. Noncurrent assets include (1) long-term investments (2) property, plant, and equipment and (3) the principal amount of loans made to other entities. include cash activities related to noncurrent assets. Investing activities A section of the statement of cash flows that includes cash activities related to noncurrent assets, such as cash receipts from the sale of equipment and cash payments for the purchase of long-term investments.For example, cash generated from the sale of goods (revenue) and cash paid for merchandise (expense) are operating activities because revenues and expenses are included in net income. include cash activities related to net income.

Operating activities A section of the statement of cash flows that includes cash activities related to net income, such as cash receipts from sales revenue and cash payments for merchandise.Each of these three classifications is defined as follows. Question: What are the three types of cash flows presented on the statement of cash flows?Īnswer: Cash flows are classified as operating, investing, or financing activities on the statement of cash flows, depending on the nature of the transaction.

Describe the three categories of cash flows.

Example of cash flow statement