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Of the three major activities of a firm, _____ are cash transactions associated with running the business.

a) Investing activities
b) Financing activities
c) Operating activities
d) Budgeting activities

1 Answer

3 votes

Final answer:

The correct answer is 'c) Operating activities', which refer to the everyday cash transactions required for running a business, such as paying expenses and earning revenues from core operations.

Step-by-step explanation:

The correct answer to the student's question is 'c) Operating activities'. Operating activities are cash transactions associated with the day-to-day functioning of a business. These include revenues earned from the company's core business operations, and the cash expenses incurred during conducting its regular business such as payments to suppliers, salaries to employees, and other operating expenses.

Financing activities and investing activities are among the other major activities of a firm. Financing activities involve the inflow and outflow of cash to fund the business and may include raising capital by issuing stock or taking out loans. Investing activities relate to the purchase and sale of long-term assets and investments, such as buying machinery or investing in research and development.

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