Question

Dividend paid by a finance company is shown as cash outflow under ______.

Options

• Operating Activities

• Investing Activities

• Financing Activities

• Both Investing and Financing Activities.

Answer 1

Dividend paid by a finance company is shown as cash outflow under Financing Activities.

Explanation:

Payment of a dividend is a cost of raising capital (share capital), regardless of whether the firm is a financial or a non-financial enterprise. Because issuing shares is a Financing Activity, any dividends paid to shareholders are always classified as a cash outflow under Financing Activities.