- 1 Marks
Question
Which of the following is NOT an operating activity?
A. Cash receipt and cash payment of an insurance entity for premiums on claims, annuities, and other policy benefits
B. Cash advances and loans made to other parties
C. Cash payments or payments from contracts held for dealing or trading purposes
D. Cash receipts from the sale of goods and rendering of services
E. Cash receipts from royalties, fees, commissions, and other revenue
Answer
B
Explanation:
Option B is correct because cash advances and loans made to other parties are typically classified as investing activities, not operating activities. Operating activities involve the primary revenue-generating activities of the business, such as receipts from sales and payments related to day-to-day operations.
- Tags: Cash Flow, Operating Activities, Statement of Cash Flows
- Level: Level 1
- Topic: Financial Statements Preparation
- Series: MAY 2018
- Uploader: Theophilus