Question

Activities that involve the production or purchase of merchandise and the sale of goods and services to customers, including expenditures related to administering the business, are classified as: A. Investing activities. B. Direct activities. C. Indirect activities. D. Operating activities. E. Financing activities.

Answer 1

Answer:

D. Operating activities.

Explanation:

A financial statement is a written report that quantitatively describes a firm's financial health. Under the financial statements is a cash-flow statement, which is used to record the cash inflow and cash equivalents leaving a business firm.

Cash flow statement, also known as the statement of cash flows, contains financial information about operating, financial and investing activities.

Hence, activities that involve the production or purchase of merchandise and the sale of goods and services to customers, including expenditures related to administering the business, are classified as operating activities. All the net income or cash from all operational business activities of a company is recorded as operating activities.