Which activities include cash transactions that affect net income?

The correct choice is operating activities because they directly relate to the primary revenue-generating activities of a business and are crucial for determining net income. When a company engages in operating activities, it involves cash transactions that result from its core operations, such as sales of goods and services, payment to suppliers, and operating expenses. These cash inflows and outflows directly impact the income statement and determine the net income for the period.

For example, when a company sells a product, the cash received from that sale is included as cash inflow from operating activities, and likewise, cash payments made for operating expenses are considered cash outflows. This relationship is essential for assessing the company’s profitability, making it a key component of financial analysis.

In contrast, investing activities primarily involve transactions related to the acquisition or disposal of long-term assets, while financing activities encompass transactions that alter the equity and debt structure of the business. Although these are important for understanding a company's cash flow and financial position, they do not directly impact net income in the same way that operating activities do. Administrative activities, on the other hand, do not typically fall into the standard financial statement categories used to report cash flow and do not represent the core operating performance of a business.