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Basic Question 3 of 20
Which of the following is not an operating activity?
B. Paying interest
C. Collecting accounts receivable
D. Purchasing insurance policies of more than one year
E. Dividend payments
A. Receiving dividends
B. Paying interest
C. Collecting accounts receivable
D. Purchasing insurance policies of more than one year
E. Dividend payments
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® 2024 Level I Curriculum, Volume 2, Module 4.