Question

‘Dividend paid by a finance company’ is classified under which of the following?

• A. Operating Activities
• B. Investing Activities
• C. Financing Activities
• D. Cash and Cash Equivalents

Hint:

Dividend paid by any company, regardless of the industry type, is classified under financing activities as it represents a return to shareholders.

Answer 1

The Correct Option is C

- Dividend payments, regardless of the company's nature (finance or non-finance), are categorized under financing activities. This classification stems from their nature as cash outflows to owners and their connection to equity financing.
- For a finance company, only dividends received (where applicable) are classified as operating activities.