Question

Statement I: In case of non-financial enterprises, payment of interest and dividend are classified as financing activities.

Statement II: In case of financial enterprises, payment of interest and dividend are classified as investing activities.

Choose the correct option from the following:

Options

• Both the statements are true.

• Both the statements are false.

• Statement I is true, but Statement II is false.

• Statement I is false, but Statement II is true.

Answer 1

Statement I is true, but Statement II is false.

Explanation:

• Statement I is true because these are related to the cost of capital and financing decisions.
• Statement II is false because in financial enterprises, interest and dividends are generally treated as operating activities, not investing activities.