- CFA Exams
- CFA Level I Exam
- Topic 4. Financial Statement Analysis
- Learning Module 4. Analyzing Statements of Cash Flows I
- Subject 2. Classification of Cash Flows and Non-Cash Activities
CFA Practice Question
Which of the following is a financing activity?
B. Paying a cash dividend
C. Receiving interest income
D. Selling an investment in marketable securities
E. Declaring a cash dividend
A. Purchasing production equipment
B. Paying a cash dividend
C. Receiving interest income
D. Selling an investment in marketable securities
E. Declaring a cash dividend
Correct Answer: B
Receiving interest income is an operating activity.
User Contributed Comments 12
| User | Comment |
|---|---|
| Done | Why is the answer not D? |
| wroger | Selling an investment is an investment activity |
| Bibhu | Again a tricky question. Catching word is "FINANCING". |
| mirfanrana | paying cash dividend is a finacing activity and receiving interest income is an operating activity. |
| bobert | Not D, because there is no real activity yet. Eventually it will lead to a CFF which is B. But the act itself is not. This is one of those questions where you look for the best answer. I'm sure you had it narrowed down to B and D, but from the last section you should know that paying a cash dividend is a CFF. |
| hannovanwyk | i agree with bobert |
| rethan | What is the difference between declaring a cash dividend and paying a cash dividend? Do companies declare dividends and then end up not paying/paying less dividends? |
| wulin | D is either a Investing Activity or Non-cash activity |
| reganbaha | declaring a dividend is all talk no action. Paying the dividend is when the talk becomes an action. This action happens to be a CFF activity. |
| poomie83 | Declaring a div does not involve a cash trans and hence not a cf item |
| Tommytang | ah! another tricky one |
| johntan1979 | CFI CFF CFO CFI non-cash |