US CMA Part 1 · Chapter 1 · Question 19 of 23
Under US GAAP, where are cash dividends paid to the company's own shareholders reported in the statement of cash flows?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) Financing activities
Explanation
Dividends paid are distributions to owners and are classified as financing cash outflows under US GAAP. IAS 7 has allowed them to be shown as either operating or financing (the IFRS 18 amendments to IAS 7 require financing for most non-financial entities), but US GAAP has always required financing.
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