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CS Executive · Corporate Accounting and Financial Management · Cash Flows

Which statement correctly describes operating activities under Ind AS 7 and AS 3?

Operating activities are the principal revenue-producing activities of the entity and other activities that are not investing or financing activities. Issue of shares, borrowing and acquisition of long-term assets are therefore outside operating activities.

  1. AThey are the principal revenue-producing activities of the entity and other activities that are not investing or financing activitiesCorrect
  2. BThey are only the activities that involve the issue of shares and borrowing of funds
  3. CThey are only the activities relating to the acquisition and disposal of long-term assets
  4. DThey are only the activities that change the size of owners' capital

Explanation

Both standards define operating activities as the principal revenue-producing activities and other activities that are not investing or financing activities. The other options describe financing or investing activities.

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