Which of the following is an example of cash flow from the operating activity?

Interest paid on term deposit by the bank

The correct answer is option 2- Interest paid on term deposit by the bank.

Interest paid on term deposit by the bank - It is a daily routine activity of the bank. As it is core activity of the bank so it an operating activity. Operating activities are the activities that constitute the primary or main activities of an enterprise. For example, for a company manufacturing garments, operating activities are procurement of raw material, incurrence of manufacturing expenses, sale of garments, etc. These are the principal revenue-generating activities (or the main activities) of the enterprise and these activities are not investing or financing activities.

OTHER OPTIONS

• Purchase of own debentures by the company- Financing activity
• Sale of fixed assets- Investing activity
• Issue of equity share capital- Financing activity