Which of the following is an operating activity?

Which of the following is an operating activity?

• A. Receiving cash interest on a bond
• B. Paying dividends
• C. Issuing bonds
• D. Purchasing equipment

Answer: (A)

Operating activities include the cash flows from the company’s everyday operations and other items treated as operating, such as cash received from interest and dividends. Receiving cash interest on a bond is considered an operating activity because it’s a cash inflow from a financial asset and is typically classified with operating cash flows in introductory accounting contexts. The other options fall into other categories: paying dividends is a financing activity, issuing bonds is a financing activity, and purchasing equipment is an investing activity.

Operating activities include the cash flows from the company’s everyday operations and other items treated as operating, such as cash received from interest and dividends. Receiving cash interest on a bond is considered an operating activity because it’s a cash inflow from a financial asset and is typically classified with operating cash flows in introductory accounting contexts. The other options fall into other categories: paying dividends is a financing activity, issuing bonds is a financing activity, and purchasing equipment is an investing activity.