Question

Which is an example of a cash flow from an operating activity? Payment of cash to lenders for interest. Receipt of cash from the sale of capital stock. Payment of cash dividends to the company’s stockholders. None of these answer choices are correct.

Answer 1

Answer: Payment of cash to lenders for interest.

Explanation: Cash flow from an operating activity is defined as a statement of the sum of cash revenues and expenditures over a period of time that explains the sources and uses of cash from ongoing regular business activities. Simply put, it is the amount of cash a business generates from revenues.

Paying cash to lenders for the purpose of profit is an example of generating revenue.