Question:medium
‘Payment of Dividend’ will come under what type of activity while preparing Cash Flow Statement?
‘Payment of Dividend’ will come under what type of activity while preparing Cash Flow Statement?
Show Hint
Dividend is a payout to shareholders (financiers of the company), so it is a financing cash flow.
Updated On: Sep 24, 2026
- Operating activity
- Investing activity
- Financing activity
- None of these
Show Solution
The Correct Option is C
Solution and Explanation
Step 1: Contrast with interest received/paid on core operations:
Unlike day-to-day trading cash flows (operating) or asset purchases/sales (investing), a dividend is not generated by running the business or acquiring assets — it is a distribution of profit to those who financed the company.
Step 2: Confirm against standard treatment:
Under Indian accounting standards, dividend paid by a company is consistently shown as a cash outflow under Financing Activities.
Final Answer:
(C) Financing activity.
Unlike day-to-day trading cash flows (operating) or asset purchases/sales (investing), a dividend is not generated by running the business or acquiring assets — it is a distribution of profit to those who financed the company.
Step 2: Confirm against standard treatment:
Under Indian accounting standards, dividend paid by a company is consistently shown as a cash outflow under Financing Activities.
Final Answer:
(C) Financing activity.
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