Question

Which of the following transactions will result in cash flows from operating activities?

• A. Cash receipts from sale of investments ₹ 60,000
• B. Cash receipts from sale of goods ₹ 94,000
• C. Dividend received ₹ 31,000
• D. Payment of cash for purchase of fixed assets ₹ 3,00,000

Hint:

Cash flows from operating activities include transactions related to the principal revenue-generating activities of the business, such as cash receipts from sales and payments to suppliers.

Answer 1

The Correct Option is B

Operating activities encompass the fundamental business operations. Receipts of cash from product sales are classified as operating cash flows due to their direct association with the entity's primary revenue-generating activities.