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Which of the following is classified as a financing activity on the statement of cash flows?
APaying cash for employee wages
BCollecting cash from credit customers
CBuying land for cash
DPaying cash dividends to stockholders
Answer & Solution
Correct answer: D. Paying cash dividends to stockholders
1. Financing activities relate to long-term debt and equity, including transactions with stockholders.
2. Paying dividends is related to stock and is therefore a financing activity.
3. Collecting from customers and paying wages are operating activities.
4. Buying land is an investing activity.
_Source: Jonick, Principles of Financial Accounting (CC BY-SA 4.0), §7.2.1 "Types of Business Activities", p.265_
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