Question

Cash receipts from ‘sale of machinery’ by a machinery dealer will be considered which type of activity from the following while preparing cash flow statement?

Options

• Investing activity

• Operating activity

• Financing activity

• Both investing and financing activity

Answer 1

Operating activity

Explanation:

When a machinery dealer sells machinery, it’s part of their regular business operations. For them, machinery is considered stock-in-trade, so cash receipts from its sale are classified under operating activities.