On the statement of cash flows, which one of the following is considered a financing activity?
A) Increase in inventory
B) Decrease in accounts payable
C) Increase in net working capital
D) Dividends paid
E) Decrease in fixed assets

Question

Quizplus · Accepted Answer

Dividends paid are a financing activity because they involve distributing earnings to the company's owners/shareholders, which is a use of funds from financing sources. Choices A, B, and E are all related to investing and operating activities. Choice C includes a change in current assets and liabilities but does not specify whether it involves financing, investing, or operating activities.

On the Statement of Cash Flows, Which One of the Following