In the cash flow statement, under which activities would cash from customers typically be reported?

• A. Investing activities
• B. Noncash activities
• C. Financing activities
• D. Operating activities

Answer: (D)

Cash flows from customers come from the day-to-day operations of the business—selling goods or providing services and collecting cash. That makes them part of operating activities, which track the core, ongoing activities that generate revenue.

Investing activities relate to buying or selling long-term assets and investments. Financing activities cover obtaining or repaying capital, such as loans, bonds, or equity, and paying dividends. Noncash activities are those that don’t involve actual cash flows in the period and are not shown in the cash flow statement as cash movements. Therefore, cash collected from customers is reported under operating activities.