A cash dividend payment to shareholders during the year should be reported on the statement of cash flows as:Multiple ChoiceAn increase in cash flows from investing activitiesA decrease in cash flows from investing activitiesA decrease in cash flows from financing activitiesAn increase in cash flows from financing activitiesA decrease in cash flows from operating activities

Question

Cheyanne

Business

17 May, 21:08

A cash dividend payment to shareholders during the year should be reported on the statement of cash flows as:Multiple ChoiceAn increase in cash flows from investing activitiesA decrease in cash flows from investing activitiesA decrease in cash flows from financing activitiesAn increase in cash flows from financing activitiesA decrease in cash flows from operating activities

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Answers (1)

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Music Man · Answer 1

A decrease in cash flows from financing activities

Explanation:

When cash dividend is paid,

It is an outflow of cash as paid, therefore it will decrease the cash flows.

Further dividend is paid to equity, or preference capital raised for business, which is a financing activity.

Therefore, a cash dividend paid to shareholders will result in decrease in cash flow from financing activities.

Whereas cash dividend received is investing activity.

Final Answer

A decrease in cash flows from financing activities.