Identify the transactions as belonging to (i) Operating Activities, (ii) Investing Activities, (iii) Financing Activities and (iv) Cash and Cash Equivalents:

Solution:-

Solution:-

a) Cash Sale of Goods:- It is the Operating Activity as it is the principal revenue activity of the business.

b) Cash Received against Revenue from Services Rendered:- It is the operating activity as it is the principal revenue activity of the business.

c) Cash Purchase of Goods:- It is the Operating Activity as it is the principal activity of the business.

d) Cash Paid against Services Taken:- It is the operating activity as it is the principal activity of the business.

e) Patents Purchased:- It is the Investing activity of the firm, as selling and purchasing assets are the investing activities of the firm.

f) Marketable Securities:- Marketable securities are cash equivalents that can be readily converted into cash on demand.

g) Bank Overdraft:- It is the loan taken to finance the business activities. It is considered a financing activity.

h) Proceeds from issue of debentures:- It is a loan raised from the public. It is considered a financing activity.

i) Purchase of shares:- The issue of shares is the financing activity.

j) Repayment of long-term loan:- Financing Activity.

k) Commission Received:- Operating Activity

l) Redemption of Debentures:- Financing Activity

m) Interest on Debentures:- Financing Activity

n) Interest on Investments:- Investing Activity

o) Income Tax Paid:- Operating Activity

p) Income paid on gain(profit) on sale of assets:- Investing Activity

q) Cash received from debtors:- Operating Activity

r) Cash paid to creditors:- Operating Activity