What type of activities include cash receipts and payments necessary to operate a business on a day-to-day basis?

Operating activities include cash receipts and payments that are essential for the daily functioning of a business. This category involves transactions related to the core operations, such as revenue from sales, payments to suppliers for goods and services, salaries and wages paid to employees, and other routine operational expenses.

These transactions reflect the fundamental business operations that generate revenue and incur expenses, making them crucial for assessing a company’s ability to sustain its operations and manage cash flow effectively. Understanding operating activities is vital as they provide insights into how well a company can maintain its liquidity and overall financial health over time.

The other types of activities, such as investing and financing activities, involve cash flows associated with long-term asset purchases or sales and raising capital, respectively, which are not directly tied to the daily operational cash flow of a business. Non-operating activities generally include transactions that do not arise from the core business functions but may involve peripheral income or expenses.