Which set of categories is used to classify cash flows on a cash flow statement?

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The key idea is that a cash flow statement groups cash movements into three activity types to show where cash comes from and how it’s used. Operating activities cover the cash effects of day-to-day business operations, investing activities relate to purchases and sales of long-term assets and investments, and financing activities involve obtaining and repaying capital and paying dividends. This structure helps readers assess liquidity and how the business funds its activities. Net income, while important for evaluating profitability, is not shown as a standalone cash flow amount on the statement; under the indirect method it is the starting point that is adjusted to arrive at cash from operating activities. The focus of the cash flow statement is not on assets, liabilities, and equity—that’s the balance sheet—nor are revenue and expense items themselves labeled as cash flow categories. That's why these three categories—operating, investing, financing—best describe how cash flows are classified.