As per AS-3, these activities are to be classified into following categories. Identify correct categories. 1. Operating, 2. Non Operating 3. Investing 4. Financing activities 5. Leasing

Operating  activities  are  the  activities  that  constitute  the  primary  or  main  activities  of  an enterprise.  For  example,  for  a  company  manufacturing  garments,  operating  activities  are procurement of raw material, incurrence of manufacturing expenses, sale of garments, etc.   As per AS-3, investing activities are the acquisition and disposal of long-term assets and other investments not included in cash equivalents. Investing activities relate to purchase and sale of long-term   assets   or   fixed   assets   such   as   machinery,   furniture,   land   and   building,   etc. Transactions related to long-term investment are also investing activities.  As the name suggests, financing activities relate to long-term funds or capital of an enterprise, e.g.,  cash  proceeds  from  issue  of  equity  shares,  debentures,  raising  long-term  bank  loans, repayment of bank loan, etc. As per AS-3, financing activities are activities that result in changes in the size and composition of the owners’ capital (including preference share capital in case of a company) and borrowings of the enterprise.