Question

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

"Cash receipt from debtors"

Options

• Operating activities

• Investing activities

• Financing activities

• Cash activities

Answer 1

Operating activities

Explanation:

Cash flow from operating activities are primarily derived from the main activities of the firm. As a result, they are typically the result of the transactions and other events that go into determining net profit or loss. The cash flows generated by the sale of goods and the payment received from it are classified as operating activities.