Which of the following is considered an operating activity on the statement of cash flows prepared using the direct method?
A) dividends paid to stockholders
B) sale of merchandise inventory for cash
C) payment to purchase equipment
D) the receipt of cash from sale of equipment

Question

Quizplus · Accepted Answer

The sale of merchandise inventory for cash is an operating activity as it is directly related to the main revenue generating activity of the business. A is a financing activity as dividends paid to stockholders are a distribution of profits. C is an investing activity as payment to purchase equipment is related to the acquisition of assets. D is also an investing activity as the receipt of cash from the sale of equipment is related to the disposal of assets.

Which of the Following Is Considered an Operating Activity on the Statement