Which of the following is an example of Cash Flow from Operating Activities?

Purchase of Inventory for Cash

The correct answer is option 3- Purchase of Inventory for Cash.

• Purchase of Machinery- Investing activity
• Issue of Shares- Financing activity
• Purchase of Investment- Investing activity
• Purchase of Inventory for Cash- Operating activity as it is a routine activity of the company.

Cash flows from operating activities primarily stem from the core operations of the business. They mainly arise from transactions and events that contribute to the determination of net profit or loss.
Examples of cash flows from operating activities encompass:

Cash Inflows from Operating Activities:
* Cash received from the sale of products and provision of services.
* Cash received from royalties, fees, commissions, and other sources of income.

Cash Outflows from Operating Activities:
* Cash disbursed to suppliers for acquiring goods and availing services.
* Cash disbursed to employees and on their behalf.
* Cash payments to an insurance company for premiums, claims, annuities, and related policy benefits.
* Cash payments for income taxes, unless these payments can be specifically attributed to financing or investing activities.