Which of the following is a characteristic of Operating activities?

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Study for the Texas Aandamp;M University (TAMU) ACCT229 Exam. Get exam-ready with flashcards, detailed explanations, and multiple choice questions. Enhance your understanding and boost your confidence!

Operating activities are primarily focused on the core business functions of a company, which encompass transactions related to the production and sale of goods and services. These activities generate revenues through sales as well as incur expenses necessary for the daily operations, such as wages, rent, and supplies. This characteristic emphasizes the operational flow of cash and the fundamental purpose of a business, which is to engage in its main revenue-generating activities.

The other options do not define operating activities correctly. Long-term investments pertain to investing activities, not day-to-day operations. Borrowing and equity financing are associated with financing activities, which involve raising funds for business operations rather than the operations themselves. Finally, asset acquisition often relates to investing activities, where the company purchases long-term assets, rather than the ongoing operations that fit the context of generating revenue and incurring expenses. Thus, the focus on revenue generation and expense incurrence clearly characterizes operating activities in accounting.