Question

Which of the following are operating activities for the purpose of preparing cash flow statement?
Cash payments to suppliers for goods and services.
Dividend received from investments in other enterprises.
Cash receipts from royalties, fees, commissions and other revenues.
Cash repayments of amounts borrowed.

• A. (i), (ii) and (iii)
• B. (i) and (iii)
• C. (i), (iii) and (iv)
• D. (iii) and (iv)

Hint:

In Cash Flow Statements, dividends received are investing inflows (except for financial enterprises) while repayments of borrowings fall under financing activities.

Answer 1

The Correct Option is B

The correct answer is (B) (i) and (iii).
Explanation: Operating activities include cash flows directly related to revenue generation and day-to-day operations.
(i) Cash payments to suppliers – operating activity.
(ii) Dividend received – under AS-3 (Revised), considered investing activity (for non-finance companies).
(iii) Cash receipts from royalties, fees, commissions – operating activity.
(iv) Cash repayments of borrowed amounts – financing activity. Hence, only (i) and (iii) are operating activities.