Accountancy Part BCash Flow Statement

Dividend received by a financing company dealing in shares and debent…

Dividend received by a financing company dealing in shares and debentures is.......

Answer & explanation

Correct answer: option 1

The correct answer is Option (1) → Operating Activity

For a financial enterprise, dealing in shares, debentures and loans is its main business. So interest and dividend received come from its principal revenue-producing activity and are operating activities. Only the dividend it pays is a financing activity.

Option (2) Investing Activity — Incorrect. Dividend received is an investing activity only for a company that is not a financial enterprise.

Option (3) Financing Activity — Incorrect. Dividend paid, not dividend received, is a financing activity.

Option (4) Cash and cash equivalents — Incorrect. Cash and cash equivalents are balances of cash, not a class of activity.

NCERT (2026-27 edition):
Interest and Dividend – “… In case of a financial enterprise (whose main business is lending and borrowing), interest paid, interest received and dividend received are classified as operating activities while dividend paid is a financing activity.”