The Caribou health plan is a for-profit organization. The financial statements that Caribou prepares include balance sheets, income statements, and cash flow statements. To prepare its cash flow statement, Caribou begins with the net income figure as reported on its income statement and then reconciles this amount to operating cash flows through a series of adjustments. Changes in Caribou's cash flow occur as a result of the health plan's operating activities, investing activities, and financing activities. Caribou is engaged in an operating activity when it

Question

Quizplus · Accepted Answer

Operating activities involve the revenue and expenses associated with the primary operations of the company. In the case of a health plan, providing healthcare services to its members is the primary operation, and paying expenses associated with those services would be an example of an operating activity. Purchasing or selling assets, disposing of a subsidiary, and repaying funds loaned by creditors are all examples of investing and financing activities, not operating activities.

The Caribou Health Plan Is a For-Profit Organization