Start networking and exchanging professional insights

Register now or log in to join your professional community.

Follow

In which section(s) of the cash flow statement do interest paid and dividends paid appear, respectively?

A. Financing             Financing

B. Financing             Investing

C. Financing            Operating

D. Investing              Investing

E. Operating            Financing

user-image
Question added by Tranquilino Jr Rivera , General Accountant , Enany Group of Companies
Date Posted: 2015/06/16
Shahbaz Hayder
by Shahbaz Hayder , Group Head of Finance , Sharif Group of Companies

Option E is the right answer.

Ahmed Shaaban
by Ahmed Shaaban , Finance Manager , BOD Secretary , Al-Murjan Group Holding Company

( A)  is the Correct answer

Mohamed Sajeer Abdul Malik
by Mohamed Sajeer Abdul Malik , ACCOUNTANT , Stone 'N' String (Pvt) Ltd.

Answer Add by : Mohamed sajeer Abudl Maleek Accountant 

 

correct answer is E

 

mansoor cheppali
by mansoor cheppali , Chief Internal Auditor , Masskar Hypermarket

both option A and E are correct

Hossam Mohamed
by Hossam Mohamed , Senior Accountant , Allied Arab Assurance Brokerage

the option E is correct answer

Nabil Jabraouti
by Nabil Jabraouti , Finance Consultant - Managing Director , BlueChip Consulting and Development

A and E are correct, C is correct too but is practically irrelevant. According to IAS-7 paragraph33, paid interest can be classified as an either operating or financing activity, except for a financial institution, e.g. a bank, where it is an operating activity. The correct answer would only be E then, for a financial institution, that is.

Paying dividends is typically a financing activity, but may also be classified as an operating one according to paragraph34 of the same international standard.

 

By the way, in practice the nature of interest plays a role in its classification. E.g. interest on overdrafts is practically only an operating activity, unlike interest on loans that many companies prefer classifying as financing.

 

Regardless of how the entity classifies these activities, it is essential that the classification is consistent.

Saidul Alam
by Saidul Alam , Accountant , Akhtar Al Balushi Trad. & Cont. L.L.C

Correct answer is A.........................

masoud naimi
by masoud naimi , paxan , paxan

D. Investing              Investing

Both Interest paid and dividend paid needs to be reported under financing activities.....so Answer is (A)..

More Questions Like This