Accountancy Part BCash Flow Statement

Which of the following is Not an Operating Activity?

Answer & explanation

Correct answer: option 3

The correct answer is Option (3) → Dividend Received by Manufacturing Company

For a non-financial (manufacturing) company, dividend received comes from its investments, so it is an investing activity, not an operating one. Only for a financial enterprise, whose main business is lending and investing, are interest and dividend received treated as operating.

Option (1) Interest Received by finance company — A true statement. An operating activity: lending is the main business of a finance company.

Option (2) Cash Revenue from operation — A true statement. An operating activity: it is cash from the main revenue-producing activity.

Option (4) Amount Received from Debtors — A true statement. An operating activity: it is cash received for goods sold.

NCERT (2026-27 edition):
Interest and Dividend – “… In case of a financial enterprise (whose main business is lending and borrowing), interest paid, interest received and dividend received are classified as operating activities while dividend paid is a financing activity. In case of a non-financial enterprise, as per AS-3, it is considered more appropriate that payment of interest and dividends are classified as financing activities whereas receipt of interest and dividends are classified as investing activities.”