While preparing the Cash Flow Statement of Alka Ltd. ‘dividend paid was shown as an operating activity by the accountant of the company. Was he correct in doing so? Give reason. (C.B.S.E. 2015)

While preparing the Cash Flow Statement of Alka Ltd. ‘dividend paid was shown as an operating activity by the accountant of the company. Was he correct in doing so? Give reason. (C.B.S.E. 2015)

Post category:Accountancy
Reading time:1 mins read

SOLUTION

No, accountant is not correct.
Reason: Dividend paid is not a principal revenue producing activity. It is a financing activity.

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