Which type of cash collection is considered an operating activity?

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Prepare for the WGU ACCT2350 Intro to Business Accounting Exam. Practice with multiple choice questions and detailed solutions to sharpen your accounting skills. Master your exam with confidence!

Multiple Choice

Which type of cash collection is considered an operating activity?

Explanation:
Cash flows from operating activities reflect the cash effects of the business’s day-to-day operations, especially cash receipts from customers for goods or services and cash payments to suppliers and employees. Collecting cash from customers is an operating cash inflow because it comes from the core activity of delivering products or services. The other options fall into different sections: issuing debt is a financing activity, buying equipment is an investing activity (capital expenditure), and paying dividends is also a financing activity.

Cash flows from operating activities reflect the cash effects of the business’s day-to-day operations, especially cash receipts from customers for goods or services and cash payments to suppliers and employees. Collecting cash from customers is an operating cash inflow because it comes from the core activity of delivering products or services. The other options fall into different sections: issuing debt is a financing activity, buying equipment is an investing activity (capital expenditure), and paying dividends is also a financing activity.

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