The Statement of Cash Flows Classifies Cash Inflows and Outflows

question 67

Essay

The statement of cash flows classifies cash inflows and outflows into three different activities: operating, investing, and financing.
Required:
Describe the types of transactions that would be included under each of those three activities.

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Definitions:

Capital Accounts

Accounts used in accounting to track the equity and financing of partners in a partnership or of an individual in sole proprietorships.

Drawing Accounts

Accounts used to track the amount of money or assets withdrawn from a business by its owners.

Owner's Equity

The residual interest in the assets of a company after deducting liabilities, representing the owner's claims against the company's assets.

Bonus

Additional compensation given to employees or stakeholders beyond the standard payment expectations.