Use the following codes to indicate how the cash flow effect, if any, of each transaction or event would be reported on a statement of cash flows if the operating activities section is prepared using the indirect method.
-Paid the cash dividends declared above.
A)Operating activity-add to net income
B)Operating activity-deduct from net income
C)Inflow from investing activity
D)Outflow from investing activity
E)Inflow from financing activity
F)Outflow from financing activity
G)Noncash investing and financing activity
H)Not reported on statement of cash flows

Question

Quizplus · Accepted Answer

Paying cash dividends is considered a financing activity because it involves the distribution of earnings to shareholders. Therefore, it is reported as an outflow from financing activities on the statement of cash flows.

Use the Following Codes to Indicate How the Cash Flow