Garrison Corporation has the following transactions:
1)Dividends are paid to the shareholders.
2)A utility bill for July is paid in August.
3)A new warehouse facility is purchased
4)Principal payments on outstanding debt are paid.
5)Employees wages are paid.
6)Forty-five units of inventory are sold for $100 each
7)Common stock is issued for $230,000 in cash.
8)A delivery van used for 5-years is sold for $12,000, which is its book value.
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Which of the above transaction(s) are examples of operating activities?
A) 2,3,5
B) 5,6,8
C) 2,3,5,6,8
D) 2,5,6

Question

Quizplus · Accepted Answer

Operating activities include transactions that affect net income. This includes payment of utility bills (2), payment of wages (5), and sale of inventory (6). Purchasing a facility (3), issuing stock (7), and selling a delivery van at book value (8) are investing and financing activities, not operating.

Garrison Corporation Has the Following Transactions