Which example is considered an operating activity for the cash flow statement?

• A. Proceeds from sale of equipment.
• B. Cash received from customers.
• C. Proceeds from issuing stock.
• D. Dividends paid.

Answer: (B)

Operating activities cover the day-to-day cash flows from selling goods or providing services—the core business activities that generate revenue. Cash received from customers is exactly this type of cash inflow, since it comes from the primary operation of the business.

Proceeds from the sale of equipment come from disposing of long-term assets, which is an investing activity. Proceeds from issuing stock relate to obtaining new capital and are financing activities. Dividends paid are also financing activities, as they involve returning value to shareholders and affect the company’s capital structure.

So, cash received from customers is classified as an operating activity.