Practicing Success

Target Exam

CUET

Subject

Accountancy

Chapter

Cash Flow Statement

Question:

'Payment of income tax is what type of activity in the cash flow statement of a company?

Options:

Operating activity

Investing activity

Financing activity

None of these

Correct Answer:

Operating activity

Explanation:

Cash Outflows from operating activities-
Cash payments to suppliers for goods and services.
Cash payments to and on behalf of the employees.
Cash payments to an insurance enterprise for premiums and claims, annuities, and other policy benefits.
Cash payments of income taxes unless they can be specifically identified with financing and investing activities.