The following items are categorized under Operating Activities:
A. Purchase of Goodwill
B. Transfer to General Reserve
C. Issue of fresh shares
D. Gain on sale of machinery
Choose the correct answer from the options given below:

B and D only

All other items for which the cash effects are investing or financing cash flows. The treatment of such items depends upon their nature. All investing and financing incomes are to be deducted from the amount of net profits while all such expenses are to be added back. For example, finance cost which is a financing cash outflow is to be added back while other income such as interest received which is investing cash inflow is to be deducted from the amount of net profit. Dividend declared is a financial activity and is therefore added back to net profit and shown as out flow under financial activity.