Which one of the following activities relate to financing activities?

The correct answer is Option (3) → Payment of dividend

Financing activities are those that change the owners' capital and the long-term borrowings of the firm. A dividend is the return paid to the shareholders on the capital they have provided, so for a non-financial company AS-3 shows dividend paid as a financing cash outflow.

Option (1) Cash receipts from royalties — Incorrect. Royalties, fees and commissions are revenues from the main business, an operating inflow.

Option (2) Cash payments for purchasing fixed assets — Incorrect. Buying long-term assets is an investing outflow.

Option (4) Cash receipts from sale of fixed assets — Incorrect. Selling long-term assets is an investing inflow.