Use the following major cash flow activities to classify the activities listed below:
-Collection of Sales Revenue
A)Operating Activity, Source of Cash
B)Operating Activity, Use of Cash
C)Investing Activity, Source of Cash
D)Investing Activity, Use of Cash
E)Financing Activity, Source of Cash
F)Financing Activity, Use of Cash
G)Non-cash Investing & Financing Activity

Question

Quizplus · Accepted Answer

Collection of sales revenue is an operating activity that generates a source of cash for the company.

Answer: D 
 If the company uses sales revenue to make an investment in capital assets such as property or equipment, it would be classified as an investing activity that uses cash.

Answer: G 
 If the company swaps an asset for another asset or issues stock options to employees, those transactions would be classified as non-cash investing and financing activity.

Note: Options B, C, E, and F are not applicable to the classification of the Collection of Sales Revenue since the revenue is not used for any investment or financing purposes.

Use the Following Major Cash Flow Activities to Classify the Activities