Which of the following is a financing activity?
A) Receipts of interest.
B) Payment of dividends.
C) Making sales on account.
D) Paying off accounts payable.

Question

Quizplus · Accepted Answer

Payment of dividends is a financing activity as it involves distributing profits to shareholders, which impacts the company's cash flow and sources of financing.

Other choices:
A) Receipts of interest - This is an operating activity as it relates to the company's primary business operations.
C) Making sales on account - This is also an operating activity as it involves generating revenue from sales.
D) Paying off accounts payable - This is a cash flow activity, but falls under operating activities as it relates to the company's normal course of paying off its obligations.

Which of the Following Is a Financing Activity