Practicing Success

Target Exam

CUET

Subject

Accountancy

Chapter

Cash Flow Statement

Question:
Interest paid by a financial company will come under which kind of activity while preparing a cash flow statement?
Options:
Cash Flow from Investing Activities
Cash Flow from Financing Activities
Cash Flow from Operating Activities
No cash flow
Correct Answer:
Cash Flow from Operating Activities
Explanation:
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.