Question

While preparing cash flow statement, ‘commission and royalty’ received is shown under?

Options

• Financing activity

• Investing activity

• Operating activity

• Both Investing activity and Operating activity

Answer 1

Operating activity

Explanation:

Commissions and royalties received are part of the main revenue operations of many businesses. Therefore, the cash flow statement includes them in operating activities, unless there is a clear connection to investing or financing activities.