Which of the following changes in retained earnings during a period will be reported in the financing activities section of the statement of cash flows?
1) Declaration and payment of a cash dividend during the period.
2) Net income for the period.
A) 1
B) 2
C) Neither 1 nor 2.
D) Both 1 and 2.

Question

Quizplus · Accepted Answer

The declaration and payment of a cash dividend during the period would decrease retained earnings and is therefore considered a financing activity. Net income for the period would increase retained earnings but is not reported in the financing activities section of the statement of cash flows. It is reported in the operating activities section.

Which of the Following Changes in Retained Earnings During a Period