Financing activities are presented as the first classification on a statement of cash flows because a company must first obtain financing when it begins operations before it can acquire assets to start operations.

Question

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Financing activities are presented as the second section on a statement of cash flows after operating activities. The first section always shows the net cash flows from operating activities, which come from the company's primary business operations. Then, the financing activities section shows the cash flows related to raising capital or repaying debt, which are necessary for the company to support its operations and acquire assets.

Financing Activities Are Presented as the First Classification on a Statement