Question

On the statement of cash flows, which one of the following is considered a financing activity?

Multiple Choice
Increase in inventory
Decrease in accounts payable
Increase in net working capital
Dividends paid
Decrease in fixed assets

Answer 1

On the statement of cash flows, dividends paid is considered a financing activity.

Step-by-step explanation:

On the statement of cash flows, dividends paid is considered a financing activity.

Financing activities are transactions that involve raising capital from investors or repaying debts to lenders.

Dividends paid represents the distribution of profits to shareholders and is classified as a financing activity because it involves the use of company funds to fulfill obligations to shareholders.