Asked by Michael Hernandez on Jun 01, 2024
Verified
Cash dividends paid on common stock would be reported in the statement of cash flows in
A) the cash flows from financing activities section
B) the cash flows from investing activities section
C) a separate schedule
D) the cash flows from operating activities section
Cash Dividends
Cash dividends are payments made by a corporation to its shareholders, usually as a distribution of profits.
Financing Activities
Transactions involving the inflow or outflow of funds related to a company's financing, such as issuing debt or equity.
Common Stock
A type of equity security that represents ownership in a corporation, providing voting rights and potentially a share in the company's profits through dividends.
- Familiarize oneself with the classification and reporting mechanisms for cash flows due to investing and financing activities.
Verified Answer
TN
Timofey NevzorovJun 02, 2024
Final Answer :
A
Explanation :
Cash dividends paid on common stock are considered a financing activity because they represent a return of investment to the shareholders. Therefore, they are reported in the cash flows from financing activities section of the statement of cash flows.
Learning Objectives
- Familiarize oneself with the classification and reporting mechanisms for cash flows due to investing and financing activities.