CFA Practice Question

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CFA Practice Question

Which of the following should be classified as financing cash flow? Assume U.S. GAAP.

I. Interest paid on borrowed funds
II. Dividends paid to stockholders
III. Interest income
IV. Dividend income
A. II only
B. I and III
C. II and IV
Explanation: Interest paid on borrowed funds would be considered operating cash flow because interest is reported on the income statement, while dividends paid to stockholders would be classified as financing cash flow because dividends flow through the retained earnings statement.

Interest and dividend income are considered operating cash flow.

User Contributed Comments 3

User Comment
rrichmondo We are assuming US GAAP here
copus it looks like it
mickykumar By default it is US GAAP and not IFRS.
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