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Briefly discuss operating and investing cash flows activities.

Briefly discuss operating and investing cash flows activities.

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Answer #1

So, first of all, we must know that there are 3 types of activities- operating, investing and financing.

Operating activities are those where in there is an increase or decrease in cash, due to operational activities or day to day business activities. Basically, there are 2 major points associated with this activity. First one, these activities  are related to net income and second one, these activities include transactions related to curr. assets and curr. liabilities. Examples could be Depreciation, increase in curr. liab.

Now, let's understand the investing cash flows activities. These are much easy to understand.

These are basically related to the cash purchase and cash sale of fixed asset or any non current asset.

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