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Which of the following cash transactions is NOT classified as an operating activity in a Cash Flow Statement?

  1. A
    Cash revenue from operations.
  2. B
    Cash receipt from trade receivables
  3. C
    Selling and distribution expenses paid.
  4. D
    Proceeds from sale of old machinery.

Solution & Step-by-step Explanation

Let us classify each transaction under AS-3 / Ind AS 7 guidelines:Operating Activities include cash transactions related to a company's core business operations. Cash sales (A), collections from customers/debtors (B), and payments for operational expenses like distribution costs (C) are all operating activities.Proceeds from the sale of old machinery (D) involves long-term productive fixed assets. Transactions related to buying or selling long-term assets are classified as Investing Activities, not operating activities.

Practice this question

Try it yourself before checking the explanation above.

Which of the following cash transactions is NOT classified as an operating activity in a Cash Flow Statement?
A
Cash revenue from operations.
B
Cash receipt from trade receivables
C
Selling and distribution expenses paid.
D
Proceeds from sale of old machinery.

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Financial StatementsCash FlowOperating Activities

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