Which of these would not be classified as an operating item in a statement of cash flows?Group of answer choicesCash payment of expenses.Cash received from sales.Cash received from the sale of surplus machinery.Cash dividends received.
Question
Which of these would not be classified as an operating item in a statement of cash flows?Group of answer choicesCash payment of expenses.Cash received from sales.Cash received from the sale of surplus machinery.Cash dividends received.
Solution
The item that would not be classified as an operating item in a statement of cash flows is "Cash received from the sale of surplus machinery." This is because it is considered an investing activity, not an operating activity. Operating activities typically include transactions in the entity's principal revenue-producing activities, such as cash received from sales of goods and services and cash payments to suppliers and employees for acquisitions of inventory and expenses. The sale of surplus machinery is a part of the company's investment strategy, not its day-to-day operating activities.
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