Question

Which of the following activities are operating activities for the purpose of preparing ‘Cash flow statement’?

1. Dividend and Interest received on securities.
2. Payment of employee benefit expenses.
3. Cash receipts from royalties and fees.
4. Issue of shares against purchase of machinery.

Options

• (i), (ii) and (iii)

• (ii), (iii) and (iv)

• (i), (ii) and (iv)

• (ii) and (iii)

Answer 1

(ii) and (iii)

Explanation:

Dividends and interest received on securities are investment activities, and issuing shares against the purchase of machinery will result in no cash flow.