Dividend paid by a manufacturing company is classified under which kind of activity while preparing cash flow statements?
Answer & explanation
Correct answer: option 2
The correct answer is option 2- Cash Flow from Financing Activities.
Dividend paid by a manufacturing company is classified under Cash Flow from Financing Activities while preparing cash flow statements Cash Flow from Financing Activities.
In case of a non-financial enterprise, as per AS-3, it is considered more appropriate that payment of interest and dividends are classified as financing activities whereas receipt of interest and dividends are classified as investing activities.