Cash flow statements are divided into three parts. Which item is not one of them?

• A. Current assets
• B. Operating activities
• C. Investment activities
• D. Financing activities

Answer: (A)

The structure being tested is how a cash flow statement classifies cash movements. A cash flow statement splits cash flows into three activities: operating activities, investing activities, and financing activities. Current assets are not a separate section; they are balance-sheet items whose changes affect cash flow within the operating activities section as part of working capital adjustments (for example, changes in accounts receivable or inventory alter cash flow from operations). Investing activities cover cash used for or generated by long-term assets and investments, while financing activities cover cash movements related to borrowings, repayments, and equity transactions. So, current assets are not one of the three sections.