Question

Which of the following is not a cash flow from operating activity?

Answer 1

Purchasing a building or a fixed asset is not a cash flow from operating activity.

• Operating activities are those activities that a done by a business which is directly related to the business work. For example, if a company sells FMCG products in the market the operating activity would be related to providing goods to the market.
• Cash flow means the total inflow and outflow of cash due to various business activities.
• When a payment from a customer is received it increases the cash flow and the liquidity of a company. Similarly, when we have to pay a supplier it decreases our cash flow and our liquidity.

Answer 2

Answer:

Purchase of equipment for cash is not a cash flow from operating activity.

Explanation:

• Cash flow or cash inflow is when an organization recieves money after delivering operational activities, and its other activities.

• The four options for this question will be:
• A)Collection of cash from receivables
• B)Payment of income tax
• C)Payment of cash for operating expenses
• D)Purchase of equipment for cash

Out of the following,

D)Purchase of equipment for cash is not a cash flow activity. As, all the rest Collection of cash from receivables, Payment of income tax and Payment of cash for operating expenses are cash flow activities.

So, by eliminating options, the answer is:

Purchase of equipment for cash

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