According to AS-3, which of the following is NOT an example of investing activities?
Answer & explanation
Correct answer: option 3
The correct answer is option 3- Cash advance made by a financial enterprise.
Cash advance made by a financial enterprise is an operating activity.
In the context of AS-3 (Accounting Standard 3), which deals with the preparation of a cash flow statement, a cash advance made by a financial enterprise is not an example of investing activities. Rather, it typically falls under operating activities. Operating activities are those activities that constitute the primary revenue-generating operations of an enterprise. Investing activities primarily pertain to the acquisition and disposal of long-term assets and other investments not classified as cash equivalents. Examples of investing activities include cash payments for the acquisition of fixed assets, cash receipt from the disposal of intangibles, and cash payment to acquire shares of another company.