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International Accounting Standard (IAS)7 Statement of Cash Flows in para31 requires:
Cash flows from interest and dividends received and paid shall each be disclosed separately. Each shall be classified in a consistent manner from period to period as either operating, investing or financing activities.
From the above statement we can understand the following:
IAS7 Para33 states that if the entity under consideration is a financial institution then interest paid and interest and dividends received are usually classified as operating activities. That means in case of statement of cash flows relating to financial institutions things are clear. Its just the case of entities other than financial institutions where accountants don’t agree on a single treatment.
agrees with Mr Moataz
Cash flows from interest either paid or received treated as operating activity .
But dividends paid are financing activities on the other hand dividends received are operating activities.
Interest paid or received is reported as Cash-Flow from Operating Activities.
Dividend being a part of financing activity, may be reported as Cash-Flow from Financing Activities but is also reported as Cash-Flow from Operating Activities.
i full agree with Mr Moataz
Good answer by Mr. Moataz.. I agree with him
Mr. Moataz has given the correct answer