Final answer:
Operating activities include day-to-day business tasks such as collecting receipts from customers (cash collected), making payments to suppliers (cash spent), and paying wages and salaries to employees (cash spent). These transactions contribute to the cash flow of the business and are essential for assessing its financial health.
Step-by-step explanation:
Operating activities involve the day-to-day functions that contribute to running a business and generating revenue. Here are three examples of operating activities:
- Receipts from customers: When a company sells goods or provides services, it collects money from customers. This represents cash collected.
- Payment to suppliers: When a company purchases goods or services from suppliers, it spends money. This is an example of cash spent.
- Wages and salaries: Companies pay wages and salaries to their employees regularly for the work they perform. This is also considered cash spent.
These activities are a part of the cash flow statement that tracks the cash that comes in and goes out of a company within a specific time period. When analyzing a business's financial health, one looks at these operating activities to understand the business's capacity to generate positive cash flow.