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In statement of cashflow dividend paid are adjusted under?

A. Operating activities

B. Financing activities

C. Investing activities

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Question ajoutée par Wasim khan wazir , Finance Specialist , Mott Macdonald
Date de publication: 2016/03/31
Shahbaz Hayder
par Shahbaz Hayder , Group Head of Finance , Sharif Group of Companies

Accountants’ opinion is divided on the treatment of dividend paid in Cash Flow Statement.

 

First Opinion

 

Dividend paid should be disclosed as operating activity.

 

As dividend is paid out of the profits generated by the entity’s operating activities it should be disclosed as operating activity. Another argument which they put is that as interest paid is a cost of funds obtained and shown as operating activity, similarly divined paid is also a cost of funds obtained and should be shown as operating activity.

 

Second Opinion

 

Dividend paid should be disclosed as financing activity.

 

As dividend is linked with the equity and changes in equity section are disclosed in financing activities section of the cash flow statement so dividend paid should also be shown in that section.

 

As per IAS7, wherever you disclosed the divined paid, it must be consistent from period to period.

Utilisateur supprimé
par Utilisateur supprimé

adjusted under Finance activities.

Vinod Jetley
par Vinod Jetley , Assistant General Manager , State Bank of India

Dividends payable can be classified as either:

  • operating activities, or
  • financing activities.

Some people prefer to classify them as operating activities, because the funds are used to facilitate the trading of the company.

Others prefer to show it as a financing expense, because dividends arise when the company raises finance, either through borrowing money or raising equity.

Waseem Abbas
par Waseem Abbas , Finance Manager , Americana Group

Dividend is adjusted under financing activities because this is a return on shareholders' investment which means they are financing the company therefore it has to be adjusted under financing activities.

georgei assi
par georgei assi , مدير حسابات , المجموعة السورية

The third answer is correct

C. Investing activities

Thank you about  invitation

Answer No (B) Financing activities

Withe my Best wishes for you

Abdul Khalique
par Abdul Khalique , Finance Manager , Value Real Estate & Construction

Dividends paid may be classified as a financing cash flow because they are a cost of obtaining financial resources. Alternatively, dividends paid may be classified as a component of cash flows from operating activities in order to assist users to determine the ability of an entity to pay dividends out of operating cash flows. 

Knowing how much cash a company uses toward paying dividends is important, especially in tough economic conditions during which cash becomes scarce. A look at the cash flow statement should tell you quickly what you need to know, and give you guidance about whether that use of capital is sustainable in the long run.

So, the answer is (A) Operating Activities

 

HASSAN AHMED
par HASSAN AHMED , Internal Auditor , TIE

Dividends paid should be under financing  activities, details you can have a look in IAS 7. Thank you

Jaishri Navani
par Jaishri Navani , Finance Manager , West Zone Fresh Supermarket LLC

Small and large businesses pay dividends as a way of returning cash to their shareholders. A dividend payable is a liability on a company's balance sheet, but it does not affect the statement of cash flow until the company actually issues the dividend checks.

Cash dividend payments affect the financing-activities section of the statement of cash flow.

حسين محمد ياسين
par حسين محمد ياسين , Finance Manager , مؤسسة عبد الماجد محمد العمر للمقاولات العامة

C >>>>>>>>>>>>>>>>>>>><<<<<<<<<<<<<<>>>>>>>>>>>>>>>>>>>>>>>

Abu Bakar Ashfaq
par Abu Bakar Ashfaq , Senior Consultant , PricewaterhouseCoopers Middle East

Financing activities. or it may be classified to operating activities as explained in other answers.

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