Which of the following would not be classified as a financing activity in a statement of cash flows?Group of answer choicesProceeds from a share issue.Repayment of borrowings.Proceeds from borrowings.Dividends received.
Question
Which of the following would not be classified as a financing activity in a statement of cash flows?Group of answer choicesProceeds from a share issue.Repayment of borrowings.Proceeds from borrowings.Dividends received.
Solution
Financing activities in a statement of cash flows typically involve the inflow of resources from issuing equity and debt, and the outflow of resources from repaying debt, repurchasing equity, and paying dividends.
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Proceeds from a share issue: This is a financing activity as it involves raising funds through issuing equity.
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Repayment of borrowings: This is also a financing activity as it involves the outflow of resources to repay debt.
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Proceeds from borrowings: This is a financing activity as it involves raising funds through debt.
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Dividends received: This is not a financing activity. Dividends received are typically classified as an operating activity as they represent returns on investments.
So, the correct answer is "Dividends received" would not be classified as a financing activity in a statement of cash flows.
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