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Basic Question 3 of 20

Which of the following is not an operating activity?

A. Receiving dividends
B. Paying interest
C. Collecting accounts receivable
D. Purchasing insurance policies of more than one year
E. Dividend payments
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User Contributed Comments 13

User Comment
kalps Div payments - financing activity
cbb1 Why isn't "D" an investing activity instead of an operating activity?
johnsk because it is not an investment. It's more like an operating activity.
sarath Note that receiving dividends is operating activity but paying dividend is not ...coz payment of dividends is not a part of income statement..
teddajr Paying of Dividend is Financing Activity. But Receiving of dividend is (CASH - no long term benefits) Operating activity.
bobert cbb1, the reason is because it is an operating activity due to the fact you will have an expense in the year for the prepaid insurance, it is simply amortized over its life. The expense is still there however.
meghanchloe The question could have been clearer, under GAAP or IFRS?
jike you should assume GAAP by default unless it is stated otherwise.
Porsche911 Always assume GAAP. Under IFRS dividends paid either CFO or CFF
robertucla I agree. Analystnotes should of stated IFRS or GAAP in question
gill15 Screw that. I'm writing the CFA in the UK. I'm assuming IFRS. None of the above.
sahil1994 Jike, please note ,We are supposed to assume IFRS by default and not GAAP
PaulC For the exam, IFRS unless stated otherwise
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Learning Outcome Statements

describe the steps in the preparation of direct and indirect cash flow statements, including how cash flows can be computed using income statement and balance sheet data

CFA® 2025 Level I Curriculum, Volume 2, Module 4.