Question

Cash flows from a firm's normal business activities are reflected in:

	1.	cash flows from investing.
	2.	cash flows from financing.
	3.	cash flows from operations.
	4.	i. cash flows from income.
	5.	cash flows from budgeting.

Answer 1

Answer : 3. Cash flows from operations

Cashflow from normal business activities are reflected under cashflow from operations. It shows the sources and uses of cash from current business activities for a particular period of time. Hence the right answer is cash flows from operations.

Cashflows from investing activities refers to the cash generated or spent on the activities which are related to the investment activities. Like purchase of fixed assets, sale of fixed assets, purchase of investment instruments etc. While cashflows from the financing activities refers to net flow of cash used for funding the company like transactions related to dividend, interInt etc. In cash flow there is not mentioned any activities under the head of cashflow from income and cashflow from budgeting.

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