Question

Which of the following items are classified as cash inflows from operating activities on the statement of cash flows?

(Select all that apply):
-borrowing from bank
-collection from customers
-receipt of interest
-sale of a building
-payment of utilities

Answer 1

Cash inflows from operating activities typically include collections from customers and receipt of interest, as these are related to regular business operations. Borrowing from bank and sale of a building are considered financing and investing activities respectively, and payment of utilities represents a cash outflow.

Step-by-step explanation:

The cash inflows from operating activities on the statement of cash flows primarily include transactions that relate to the day-to-day functioning of a business. In this context, the items that classify as cash inflows from operating activities are :

• Collection from customers: This represents the cash that the company receives from its customers for the goods or services it has sold.
• Receipt of interest: This can include interest earned on business bank accounts or other investments directly related to the operating activities of the business.

On the other hand, borrowing from a bank would be considered a financing activity, sale of a building would be an investing activity, and payment of utilities would be considered a cash outflow for operating activities.