Question

Dividend paid by a non-finance company is shown as ______.

Options

• Operating Activity

• Investing Activity

• Financing Activity

• Cash and Cash Equivalent

Answer 1

Dividend paid by a non-finance company is shown as Financing Activity.

Explanation:

Payment of a dividend is a direct cost of raising share capital. Since issuing shares alters the size and composition of a company’s equity capital, it is classified as a financing transaction. Therefore, dividends paid are always shown as a cash outflow under Financing Activities, whether the company is a non-finance or a finance company.