Which of the following are examples of cash flow from operating activities as per AS-7? 1. Cash receipts from the sale of goods and the rendering of services. 2. Cash receipts from disposal of intangible assets. 3. Cash receipts from royalties, fees, commissions and other revenue. 4. Cash payments to suppliers for goods and services. 5. Cash proceeds from issuing shares or other similar instruments. 6. Cash payments to and on behalf of employees. Select the correct answer:

The correct answer is: C. 1, 2, 3 and 4

Cash flow from operating activities is the cash generated from the company’s core business activities. It is calculated by taking the net income and adjusting it for non-cash items, such as depreciation and amortization.

The following are examples of cash flow from operating activities:

• Cash receipts from the sale of goods and the rendering of services. This is the most common type of cash flow from operating activities. It represents the cash that the company receives from selling its products or services.
• Cash receipts from royalties, fees, commissions and other revenue. This includes any cash that the company receives from sources other than the sale of goods or services, such as royalties, fees, and commissions.
• Cash payments to suppliers for goods and services. This is the cash that the company pays to its suppliers for the goods and services that it uses in its operations.
• Cash payments to employees. This includes the cash that the company pays to its employees in the form of salaries, wages, and benefits.

Cash receipts from disposal of intangible assets and cash proceeds from issuing shares or other similar instruments are not examples of cash flow from operating activities. These are considered to be cash flows from investing and financing activities, respectively.

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