CFA Practice Question

There are 534 practice questions for this study session.

CFA Practice Question

Which of the following statement(s) is (are) true?

I. Transactions involving sales and the cost of goods sold are summarized as operating activities.
II. Since interest and dividend receipts are not related to operating activities, they are not shown as part of the net cash flow from operating activities on the statement of cash flows.
Correct Answer: I

Operating activities are transactions entering into the determination of net income, with the exception of gains and losses relating to financing or investing activities. While interest and dividend receipts are not related to operating activities, they do enter into the determination of net income. Because of this, the FASB decided to classify the related cash flows as operating activities. Dividend payments are financing activities.

User Contributed Comments 4

User Comment
vincenthuang interest and dividend receipts enter into CFO
danlan And dividend payment enters into CFF
mirfanrana transaction involves sales and COGS are operating activities
boddunah interest and dividend receipts are operating or investing cash flows under IFRS. we should assume GAAP if not specified, however.
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