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3 July, 12:56

A cash dividend payment to shareholders during the year should be reported on the statement of cash flows as:a. An increase in cash flows from financing activities b. An increase in cash flows from investing activities c. A decrease in cash flows from operating activities d. A decrease in cash flows from investing activities e. A decrease in cash flows from financing activities

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  1. 3 July, 13:45
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    Answer: Option E

    Explanation: In simple words, financing activities refers to the activities that directly affects the long term liabilities and equity of a company. Transactions that are recorded as financing activities usually relate to creditors and stockholders with objectives involving expansions or other such changes in company operations.

    Thus, cash dividends will be paid to equity shareholders, who are considered to be owners of the company, and as they decreases the cash from the company it will be termed as an outflow.
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