What are the three sections of the cash flow statement?

The correct answer identifies the three main categories of activities that the cash flow statement encompasses: operating activities, investing activities, and financing activities.

Operating activities reflect the cash flows generated from the core business operations, including revenues and expenses. This section shows how much cash is generated or spent in the day-to-day operations of the business.

Investing activities account for cash transactions for the acquisition and disposal of long-term assets and investments. This section provides insight into a company’s investments in equipment, property, or securities, and illustrates how these investments affect cash flow.

Financing activities highlight cash flows related to borrowing and repaying debt, as well as transactions with shareholders, such as issuing stock or paying dividends. Understanding these flows is crucial for assessing how a company finances its operations and growth.

The other answer choices describe elements that are part of different financial statements or concepts but do not accurately represent the sections of the cash flow statement. Current assets, long-term liabilities, and equity relate to the balance sheet. Operating income, net cash, and capital expenditures are financial metrics that could appear in various reports but do not structure the cash flow statement. Lastly, revenues, expenses, and net profit are elements of the income statement, focusing on profitability rather than cash flow.