Three kinds of activity

Every cash flow goes under one of three activities:

• Operating activities: the firm's main revenue-producing business. Cash received from customers; cash paid to suppliers and employees; income tax paid.
• Investing activities: buying and selling long-term assets (machinery, land) and investments. For an ordinary (non-financial) company, interest and dividends received go here too.
• Financing activities: dealings with owners and lenders: issuing and redeeming shares and debentures, raising and repaying loans, and paying interest and dividends.

The class depends on the firm's main business. For a financial enterprise (a bank, or a firm that invests for a living), interest paid, interest received and dividends received are all operating; only dividends paid are financing. So interest received by a bank is operating, but interest received by a shoe factory is investing.

Non-cash transactions are left out, because no cash moves: for example, buying a machine by issuing shares, or converting debentures into shares.

Extraordinary items (like an insurance claim after an earthquake) are shown separately, under the activity they belong to.