Question:
To which activity does the payment of dividend belong?
To which activity does the payment of dividend belong?
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Dividend payment is always reported under financing activities in cash flow statements.
Updated On: Nov 30, 2025
- Operating activity
- Investing activity
- Financing activity
- Bad debts
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The Correct Option is C
Solution and Explanation
The payment of dividends is treated as a financing activity because it involves decisions related to the company's capital structure and distribution of profits to shareholders. Operating activities relate to business operations and investing activities relate to long-term assets. Dividend payment reduces company reserves and affects equity, which falls under financing decisions. Hence, the correct classification is financing activity.
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