Practicing Success

Target Exam

CUET

Subject

Accountancy

Chapter

Cash Flow Statement

Question:

Dividend tax is classified as..........activity in the cash flow statement of the company.

Options:

Operating

Investing

Financing

Cash equivalents

Correct Answer:

Financing

Explanation:

The correct answer is option 3- Financing.

Tax on operating profit should be classified as operating cash flows.
Dividend tax, i.e., tax paid on dividend should be classified as financing activity along with dividend paid.
Capital gains tax paid on the sale of fixed assets should be classified under investing activities.