In order to assess an entity's cash performance it is common to classify its activities into operating, investing and financing. For a medical practice, which of the following would be an operating activity?
A) Billing a patient for a consultation.
B) Purchasing new equipment for the surgery.
C) Repaying a portion of a loan.
D) Selling an old computer.

Question

Quizplus · Accepted Answer

Billing a patient for a consultation is an activity directly related to the core operations of a medical practice, and thus it is classified as an operating activity. Purchasing new equipment and repaying a loan are typically classified as investing and financing activities, respectively. Selling an old computer could be either an investing or financing activity, depending on the circumstances.

In Order to Assess an Entity's Cash Performance It Is