Series 79: Operating Activities

Operating Activities

The first section of a cash flow statement reports cash inflows and outflows from operating activities. Typically, the operating activities section starts with the net income shown on the income statement and reconciles that figure to the cash the company actually received or spent during the period. Essentially, the cash flow statement is converting operating activity financial data from an accrual to a cash basis.

To make this conversion, the operating activities section adjusts for items such as accounts receivable that are counted as revenue in the income statement, even though cash has not been received. An increase in accounts receivable from the previous balance sheet to the current bala