Under GAAP
A) dividends paid can be either an operating or investing item.
B) dividends received can be either an operating or investing item.
C) the income statement uses the headings operating, investing, and financing.
D) taxes are always treated as an operating item.

Question

Quizplus · Accepted Answer

Under GAAP, taxes are typically treated as an operating item on the cash flow statement. Dividends paid are classified as financing activities, and dividends received are classified as operating activities. The income statement does not use the headings operating, investing, and financing; these are used in the cash flow statement.