Barkley Inc.'s record keeping system incorporates the appropriate classification codes into the initial recording of transactions in the Cash account and then prepares the statement of cash flows.One can prepare the statement of cash flows by examining every transaction affecting the cash account, and classifying each as
A)a cash receipts, cash disbursements, or financing activity.
B)an operating, investing, or financing activity.
C)a cash receipts, cash disbursements, or investing activity.
D)a cash receipts, cash disbursements, or operating activity.
E)a cash receipts, cash disbursements, or exchange activity.

Question

Quizplus · Accepted Answer

The most appropriate classification codes for preparing a statement of cash flows are operating, investing, and financing activities. These categories provide a more meaningful analysis of the sources and uses of cash for a company's operations. The options A, C, D, and E do not include investing activities, which is an essential category for analyzing a company's capital expenditures, acquisitions, and sales of long-term assets. Therefore, option B is the best choice.