Question

Rearrange the following in the correct sequence of Cash Flow Statements: A. Calculation of cash flow from investing Activities
B. Opening Balance of cash and cash Equivalents
C. Calculation of cash flow from operating Activities
D. Calculation of cash flow from financing Activities
E. Closing Balance of Cash and Cash Equivalents
Choose the correct answer from the options given below:

• A. B, C, A, D, E
• B. A, C, D, B, E
• C. B, E, C, A, D
• D. C, A, D, B, E

Hint:

Cash flow statements generally present operating, investing, and financing activities in order, then reconcile opening and closing cash balances.

Answer 1

The Correct Option is D

Step 1: Operating Activities Cash Flow
The cash flow statement commences with operating activities, representing the primary cash generation of the business.
Step 2: Investing Activities Cash Flow
Subsequently, cash flows from investing activities, such as the acquisition and disposal of fixed assets, are determined.
Step 3: Financing Activities Cash Flow
Following this, cash flows from financing activities, including debt and equity transactions, are calculated.
Step 4: Opening Cash and Cash Equivalents Balance
The initial cash balance is recorded, typically for the purpose of reconciling net cash flow changes.
Step 5: Closing Cash and Cash Equivalents Balance
Lastly, the closing balance is calculated to ascertain the cash position at the period's conclusion.
Step 6: Sequence Summary
Therefore, the correct order is:
C (Operating), A (Investing), D (Financing), B (Opening Balance), E (Closing Balance).