Which of the following is an example of cash outflow in operating activities?

In the context of operating activities, cash payments for materials and services represent an essential component of a business’s day-to-day financial operations. These expenses are directly tied to the company’s core functions, involving the costs required to produce goods or deliver services. This outflow reflects the cash used to manage ongoing operations, including purchasing raw materials and settling service contracts, which are fundamental for generating revenue.

By contrast, cash paid for dividends is related to financing activities, as it involves distributing profits to shareholders rather than supporting operational needs. Cash received from asset sales pertains to investing activities, reflecting changes in ownership of long-term assets, while cash borrowed from banks is also a financing activity, indicating debt accumulation rather than operational cash flow. Thus, cash payments for materials and services distinctly represent operational cash outflows, making this the correct choice in the context of the question.