Which of the following is not an operating activity?

Operating activities include cash flows from the principal revenue-producing activities of the enterprise. These are transactions that enter into the determination of net profit or loss.

Analysis of each option:

Cash revenue from operations → This is cash received from the main business activities (like sales). Clearly an operating activity.

Cash receipt from trade receivables → Trade receivables arise from credit sales. When cash is collected from customers, it represents cash inflow from operating activities.

Selling and distribution expenses paid → These are expenses incurred in the normal course of business operations. Payment of such expenses is an operating activity.

Proceeds from sale of old machinery → This is cash received from disposal of a fixed asset. Under AS-3 (Cash Flow Statement), purchase and sale of fixed assets are classified as investing activities, not operating activities.

The key distinction is that operating activities relate to the day-to-day business operations that generate revenue and incur expenses, while investing activities involve acquisition and disposal of long-term assets like machinery, equipment, and investments.

Sale of machinery represents disinvestment in fixed assets, making it an investing activity.

Correct Answer: Option 4