Under IAS 7, dividends paid by a company are normally classified in the statement of cash flows as which type of activity?
Correct answer: C. Financing activity
- A. Operating activity
- B. Investing activity
- C. Financing activity
- D. Non-cash activity
Explanation
Dividends paid represent a distribution of finance to the company's owners and are normally shown as financing cash flows. They are not payments for acquiring assets or for the main operating activities.
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Financial statements present a business's financial performance and position through the income statement, statement of financial position, cash flow statement and changes in equity. Questions involve preparing and interpreting these statements, adjusting entries, depreciation, closing inventory, accrued and prepaid items, and distinguishing profit from cash flow.
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