Question

Which of the following changes in retained earnings during a period will be reported the financing activities section of the statement of cash flows? 1. Declaration and payment of a cash dividend during the period. 2. Net income for the period. A) 1 B) 2 C) Neither 1 nor 2. D) Both 1 and 2

Answer 1

A) 1

Step-by-step explanation:

The financing activities section of the statement of cash flows record transactions that are related to the financing of the entity's ordinary course of business.

These are activities that result in changes to long term debt and equity.

Such include; borrowing and repayment of long-term loans, Issuance and acquisition of own shares of common and preferred stock etc.

Declaration and payment of a cash dividend during the period is a financing activity while net income for the period is an operating activity.

Hence the right option is A) 1