Question : Under which type of activity will you classic 'Commission and Royalty Received' while preparing the Cash Flow Statement?
Option 1: Operating activities
Option 2: Investing activities
Option 3: Financing activities
Option 4: Cash and cash equivalents
Correct Answer: Operating activities
Solution : Answer = Operating activities
'Commission and royalty received' would be classified under operating activities when preparing the cash flow statement. Operating activities involve cash inflows and outflows related to the primary revenue-generating activities of the business, such as sales of goods or services and other operational activities. Hence, the correct option is 1.
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