ITPEC IP October 2019 Question 70
ITPEC IP October 2019 — Question 70 of 100
Cash received from selling the company's products is reported under sales activities. It arises from the company's principal revenue-producing operations, so it belongs to the operating or sales portion of cash flow rather than to raising capital or acquiring long-term assets.
Answer (a)
Why not others:
- financial activities concern borrowing, repayment, issuing shares, and distributions to owners
- investment activities concern acquiring or disposing of long-term assets and investments
- administrative activities are not a standard major cash-flow classification for this purpose
Key rule: Product sales generate operating cash flow; asset investments generate investing cash flow; financing changes debt or equity funding.
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