Identify the Operating Activity for a trading organisation.

The correct answer is Option (4) → Sale of goods

Operating activities are the main revenue-producing activities of an enterprise. For a trading organisation, buying and selling goods is the main activity, so cash from sale of goods is an operating cash flow.

Option (1) Payment of Dividend — Incorrect. Paying dividend is a return to the owners of capital, so it is a financing activity.

Option (2) Receipt of Dividend — Incorrect. For a trading (non-financial) organisation, dividend received is earned on investments, so it is an investing activity.

Option (3) Issue of shares — Incorrect. Issuing shares raises long-term capital, so it is a financing activity.