Which of the following is not an operating activity?

The correct answer is Option (1) → Proceeds from long-term borrowings

Operating activities are the main revenue-producing activities of the business: selling goods and services, collecting from customers, paying suppliers and employees. Money raised by long-term borrowing changes the size of the firm’s borrowings, so it is a financing activity, not an operating one.

Option (2) Cash revenue from operations — An operating activity. Cash received from selling the firm’s goods and services is the main operating inflow.

Option (3) Cash receipt from trade receivables — An operating activity. It is the cash collected for goods sold on credit, so it comes from the same sales.

Option (4) Employee benefits expenses paid — An operating activity. Paying salaries and other benefits to employees is an operating outflow.