CFA Practice Question

There are 534 practice questions for this study session.

CFA Practice Question

Which of the following is a financing activity?

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
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