Under US GAAP, on a cash flow statement: Both interest and dividend payments are

Question

Under US GAAP, on a cash flow statement:

Both interest and dividend payments are classified as operating cash flows.

Interest expense is classified as an operating cash flow but dividend payment is classified as a financing cash flow.

Interest expense is classified as a financing cash flow but dividend payment is classified as an operating flow.

Both interest and dividend payments are classified as financing cash flows.

Both interest and dividend payments are classified as operating cash flows.

Interest expense is classified as an operating cash flow but dividend payment is classified as a financing cash flow.

Interest expense is classified as a financing cash flow but dividend payment is classified as an operating flow.

Both interest and dividend payments are classified as financing cash flows.

Explanation / Answer

Ans;

Interest expense is classified as an operating cash flow but dividend payment is classified as a financing cash flow

Explanation;

Like U.S. GAAP, international standards also require a statement of cash flows. Consistent with U.S. GAAP, cash flows are classified as operating, investing, or financing.

However, the U.S. standard designates cash outflows for interest payments and cash inflows from interest and dividends received as operating cash flows.

Dividends paid to shareholders are classified as financing cash flows

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