 Hello in this lecture we will define operating activities. According to fundamental accounting principles Wild 22nd edition the definition of operating activities is activities that involve the production or purchase of merchandise and the sale of goods or services to customers including expenditures related to administering the business. We will be considering operating activities in the context of the statement of cash flows, the operating activity being the first of three parts those three parts being cash flows from operations, the operating activities and the cash flows from investing activities and cash flows from financing activities. When we think of cash flows from operating activities we're basically taking the income statement in essence and converting that net income in one format or another either the direct method or indirect method to net income on a cash basis or net cash flows from