Question

Cash receipts from interest and dividends are classified as A. investing activities. B. either financing or investing activities. C. financing activities. D. operating activities.

Answer 1

A. investing activities.

Step-by-step explanation:

Cash flow statement is a part of financial statements, which represents the change in cash from various activities, categorized into three categories, operating, investing and financing.

Under operating activities cash received or paid for normal business is shown, in investing activities any activity in the form of investment whether short term or long term and the resultant income is shown, any dividend received or interest received will be from any investment made, therefore, it will be shown as investing activity,

Further, any activity in the nature of raising funds and paying interest or dividend on such funds is financing activity.

Thus, correct option is

A. Investing Activity

Answer 2

Cash receipts from dividends and interest comes under D) operating activities.

Step-by-step explanation:

Cash flow is a type of financial statement , which shows how change in balance sheet accounts and income statement accounts affect a company's cash and cash equivalent. So here the analysis would be breakdown in to 3 parts which are operating, investing and financing activities.

Items such as interest received and dividend received would come under the operating activities because both of these items are used in calculating the net income. Hence the correct option is D.