In a statement of cash flows,which of the following would be classified as an operating activity?
A)The purchase of equipment.
B)Dividends paid to the company's own common stockholders.
C)Tax payments to governmental bodies.
D)The cash paid to retire bonds payable.

Question

Quizplus · Accepted Answer

Tax payments to governmental bodies are considered an operating activity because they are a necessary expense to run the business and generate revenue. The purchase of equipment and retirement of bonds payable would be classified as investing and financing activities, respectively. Dividends paid to common stockholders would also be a financing activity.

In a Statement of Cash Flows,which of the Following Would