Question: For reporting purposes all cash flows are classified within one of three categories: operating activities,
investing activities, and financing activities. What transactions are specifically identified as operating activities?
Answer: Operating activities generally involve producing and delivering goods and providing services. These
events are those that transpire on virtually a daily basis as a result of the organization’s primary function. For a
business like Borders, operating activities include the buying and selling of books (and other inventory items) as
well as the multitude of other tasks required by that company’s retail function. In simple terms, operating activities
are those that are expected to take place regularly in the normal course of business.
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