- CFA Exams
- CFA Level I Exam
- Topic 3. Financial Statement Analysis
- Learning Module 20. Understanding Cash Flow Statements
- Subject 1. Classification of Cash Flows and Non-Cash Activities
CFA Practice Question
Which of the following should be classified as financing cash flow?
II. Dividends paid to stockholders
III. Interest income
IV. Dividend income
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. |