Question

Hollis, an individual, makes a cash contribution to Orchestra Y, a nongovernmental not-for-profit organization, unrestricted as to use and lacking any conditions which must be met before it can be used. Hollis considers the cash contribution an investment in the cultural future of the city where Orchestra Y is located. Hollis’s contribution should be reported in Orchestra Y’s statement of cash flows as an inflow from Multiple Choice Capital and related financing activities Operating activities Investing activities Financing activities

Answer 1

Answer:

Operating activities

Explanation:

Operating activity of a business is the function that a business performs that is directly related to provision of goods and services to customers. It is the core business activity.

For example a car production company has manufacturing as its core operating activity.

In this scenario Hollis, an individual, makes a cash contribution to a nongovernmental not-for-profit organisation and is considered as an investment in the cultural future of the city where Orchestra Y is located.

Since the contribution is for investment in the community and this is a core function of the NGO, it can be reported as cash flow from its operating activities