Which statement provides a view of cash inflows and outflows categorized by operating, investing, and financing activities?

• A. Balance Sheet
• B. Ratio Analysis
• C. Statement of Cash Flows
• D. Income Statement

Answer: (C)

Cash inflows and outflows categorized by operating, investing, and financing activities are shown in the Statement of Cash Flows. This financial statement traces the actual movement of cash during a period, breaking it into three sections: operating activities (cash generated by core business functions and day-to-day operations), investing activities (cash used for or generated from long-term assets and investments), and financing activities (cash from borrowing, repaying debt, issuing equity, and paying dividends). This focus on cash movements, rather than accounting profits, is what makes the statement of cash flows the best source for viewing how cash enters and leaves the business across its three main activity areas. The Balance Sheet shows the position of assets, liabilities, and equity at a point in time; the Income Statement shows profitability over a period on an accrual basis; and Ratio Analysis is a tool for evaluating relationships between financial statement items, not a standalone cash-flow report.