Question

Which of the following statements is incorrect?

Options

• Payment of dividends and interest will result in a cash outflow from financing activities.

• Payment of employee benefit expenses will result in cash outflows from operating activities.

• Receipt of interest and dividends will result in cash inflow from financing activities.

• Operating activities are the principal revenue-generating activities of the enterprise.

Answer 1

Receipt of interest and dividends will result in cash inflow from financing activities.

Explanation:

For a non-financial company, the receipt of interest and dividends is treated as a cash inflow from investing activities. However, for financial companies, it is classified as a cash inflow from operating activities.