Question

In the case of financial enterprises, the cash flow resulting from interest and dividend received and interest paid should be classified as cash flow from _____________.

• A. Operating activities
• B. Financing activities
• C. Investing activities
• D. None of the above

Answer 1

The correct option is A Operating activities

Cash flows from interest and dividends received and paid should each be disclosed separately. Cash flows arising from interest paid and interest and dividends received in case of a financial enterprise should be classified as cash flows arising from operating activities. In the case of other enterprises, cash flows arising from interest paid should be classified as cash flows from financing activities while interest and dividends received should be classified as cash flows from investing activities.