Question

Operating activities are most closely related to a. long-term assets. b. dividends and treasury stock. c. long-term liabilities and stockholders' equity. d. current assets and current liabilities.

Answer 1

Operating activities are most closely related to current assets and current liabilities. Therefore, the correct answer is option 'D'.

The functions of a business that are directly related to providing goods and/or services to the market are referred to as operating activities.

Manufacturing, distributing, marketing, and selling a product or service are examples of core business activities.

Operating activities generate the majority of a company's cash flow and determine whether or not it is profitable.

Cash receipts from goods sold, payments to employees, taxes, and payments to suppliers are all examples of common operating activities.

These activities are detailed in a company's financial statements, particularly the income and cash flow statements.

Operating activities differ from investing or financing activities, which are functions of a business that are not directly related to the provision of goods and services.

Instead, financing and investing activities aid the company's long-term performance.

This means that a company's issuance of stock or bonds does not count as an operating activity.

Hence, the correct answer is 'D'.

Learn more about operating activities:

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