When using the indirect method to determine operating cash flows, how would the declaration and payment of cash dividends be shown on the Statement of Cash Flows?
A)operating activities
B)investing activities
C)financing activities
D)noncash investing and financing activity
E)not reported on the statement of cash flows.

Question

Quizplus · Accepted Answer

The declaration and payment of cash dividends would be shown under financing activities on the statement of cash flows using the indirect method. This is because dividends are a distribution of profits to shareholders, which is a financing activity.

When Using the Indirect Method to Determine Operating Cash Flows