Cash flows related to day to day activities of a business are referred to, on a Cash Flow Statement, as

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BlackTom AI · Accepted Answer

The question asks: Cash flows related to day to day activities of a business are referred to, on a Cash Flow Statement, as

In a typical Cash Flow Statement, cash flows are categorized into three broad activities: operating activities (day-to-day core business operations), investing activities (purchase/sale of long-term assets and investments), and financing activities (issuance/repayment of debt and equity).

Option availability note: The provided data shows only one answer: 'a. operating activities.' but there are no additional answer options listed for comparison. This limits the ability to evaluate alternative distractors such as investing activities or financing activities.

Nevertheless, the concept itself can be explained. Operating activities encompass cash inflows and outflows from the primary revenue-generating activities of the business, including receipts from customers, payments to suppliers, payments for operating expenses, and other cash flows that are part of normal business operations. These are distinct from investing activities, which involve long-term assets, and financing activities, which involve capital structure changes.

If a student encounters options that claim:
- Investing activities relate to day-to-day operations: this would be incorrect because investing deals with long-term assets, not routine operations.
- Financing activities relate to day-to-day cash flows: this would also be incorrect because financing pertains to borrowing, repaying debt, issuing stock, and other financing transactions.

In summary, the correct conceptual grouping for day-to-day operating cash flows is operating activities, while the absence of additional options means we cannot critique each alternative choice here. The core takeaway is that operating activities reflect the core business’s regular cash receipts and payments, as opposed to the other two categories that cover non-operational cash movements.

Cash flows related to day to day activities of a business are referred to, on a Cash Flow Statement, as

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