Question

Classify the following activity into operating activities, investing activities, financing activities or cash activities.

"Cash Sales"

Options

• Operating activities

• Investing activities

• Financing activities

• Cash activities

Answer 1

Operating activities

Explanation:

Securities and loans may be held by a company for dealing or trading reasons, in which case they are analogous to inventory purchased for resale. As a result, cash flows from dealing or trading securities are considered as operating activities.