Classified into three main sections reflecting major cash flow activities:
Operating activities: day-to-day activities including receipts and payments
Receipts from customers.
Payments to suppliers and employees.
Investing activities: relate to the acquisition and/or disposal of non-current assets (e.g. payments for plant and equipment) and investments.
Financing activities: relate to changing the size and/or composition of the financial structure of the entity (e.g. repayment of borrowings).
Over to you
Classify each transaction into an operating, investing, or financing activity, or a non-cash transaction and indicate whether it is a cash inflow or outflow.
Credit purchases, $12 000.
Cash paid to suppliers, $16 000.
Credit sales, $21 000.
Cash payments received on accounts receivable, $14 000.