Which of the following would not be classified as a financing activity in a statement of cash flows?Group of answer choicesDividends received.Repayment of borrowings.Proceeds from a share issue.Proceeds from borrowings.
Question
Which of the following would not be classified as a financing activity in a statement of cash flows?Group of answer choicesDividends received.Repayment of borrowings.Proceeds from a share issue.Proceeds from borrowings.
Solution
The option that would not be classified as a financing activity in a statement of cash flows is "Dividends received."
Here's why:
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Financing activities in a statement of cash flows typically include transactions that involve long-term liabilities, owner's equity, and changes to short-term borrowings.
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"Repayment of borrowings," "Proceeds from a share issue," and "Proceeds from borrowings" all fall under this category. They are all related to either obtaining or repaying capital that the company uses for its operations.
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However, "Dividends received" is not a financing activity. This is because it represents income from investments, which is typically classified as an investing activity, not a financing activity.
So, the correct answer is "Dividends received."
Similar Questions
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Item5Item 5Which of the following items would not be classified as a cash flow from financing activities?Multiple ChoicePayments of amounts owed to owners.Borrowing from financial institutions.Issuing additional common stock.Making a payment on account.
Which of the following would be included in cash flows from financing activities?Multiple ChoiceCash proceeds from sales.Cash received from a sale of land.Cash dividends paid.Cash used for purchases of equipment.
Which of the following items would be classified as an investing activity in a statement of cash flows?Group of answer choicesPayments for businesses.Proceeds from the repayment of related party loans.Proceeds from the sale of plant and equipment.All of the items would be classified as investing activities.
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