Define and discuss the differences between operating,investing,and financing activities.

Operating activities involve the day-to-day business activities that generate operating income.Examples are production and purchase of merchandise,the sale of goods to customers,and the expenditures to administer the business.Investing activities generally include those transactions that affect long-term assets.They also include the purchase and sale of short-term investments,and lending and collecting from notes receivable.Financing activities include those transactions and events that affect long-term liabilities and equity.They also include borrowing and repaying principle amounts of both long- and short-term notes.