Operating Activities Provided and Used in the Cash Flow Statement

The Cash Flow Statement of a business is one of the most important schedules in Accounting. Balancing the activities section can be difficult.


Public businesses are required to present three financial statements

Income Statement
Balance Sheet
Statement of Cash Flows
Information in the Cash Flow Statement adds to the picture that the other statements provide. A company may have a solid financial position, and it may be generating income, but if it consistently does not convert that income to cash, it will have difficulty surviving.

Components of the Cash Flow Statement
The Cash Flow Statement is broken down into three sections:

Operating Activities
Investing Activities
Financing Activities
The term operating activities is fairly self-explanatory. It relates to items found on the income statement and in the current assets and liabilities sections of the balance sheet

The other two statements pull from the company’s books and usually relate to long term assets or liabilities. Like the income statement, the cash flow statement concerns a period of time, while the balance sheet is shows the assets and liabilities on a specific date. On the Cash flow statement, Net income is listed first, before the other main three parts of the statement.


Operating Activities
Investing Activities
Financing Activities
The term operating activities is fairly self-explanatory. It relates to items found on the income statement and in the current assets and liabilities sections of the balance sheet

The other two statements pull from the company’s books and usually relate to long term assets or liabilities. Like the income statement, the cash flow statement concerns a period of time, while the balance sheet is shows the assets and liabilities on a specific date. On the Cash flow statement, Net income is listed first, before the other main three parts of the statement.

Cash Flow Statement Operating Activities August 31, 2010

Cash sales receipts $7.000
Cash receipts from accounts receivable $40,000
Cash paid from petty cash ($3,000)
Cash paid from accounts payable ($27,000)
Cash paid payroll ($10,000)
Cash paid income taxes ($5,000)
Net increase in cash $2,000
Cash beginning of month $5,000
Cash end of month $7,000