- 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 operating 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. I only
B. I, III, IV
C. I and III
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 4
| User | Comment |
|---|---|
| cswin | int and div are other income in Net Income. therefore, in op CF |
| Vexxum | I assume that this is under GAAP? |
| meeravenk | Vexxum ... not USGAAP, IFRS |
| cebus | In this instance, it can work under both. However, if not stated we are to assume it's GAAP |