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 of a cash dividend paid 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 of a cash dividend paid during the period represents a use of retained earnings and is reported in the financing activities section of the statement of cash flows. Net income for the period represents an increase in retained earnings but is not reported in the financing activities section. Instead, it is reported in the operating activities section.

Which of the Following Changes in Retained Earnings During a Period