Question

In the operating section of the consolidated statement of cash flows, using the indirect method, all but which one of the following might appear?

1) Net income
2) Depreciation expense
3) Interest expense
4) Dividends paid

Answer 1

In the operating section of the consolidated statement of cash flows, all but dividends paid might appear.

Step-by-step explanation:

In the operating section of the consolidated statement of cash flows, using the indirect method, all but dividends paid might appear. The operating section of the consolidated statement of cash flows shows the cash generated from the company's core operations. The other options, net income, depreciation expense, and interest expense, are all components that are typically included in the operating section of the statement.

A dividend is a distribution of profits by a corporation to its shareholders.When a corporation earns a profit or surplus, it is able to pay a portion of the profit as a dividend to shareholders. Any amount not distributed is taken to be re-invested in the business (called retained earnings).

The current year profit as well as the retained earnings of previous years are available for distribution; a corporation is usually prohibited from paying a dividend out of its capital. Distribution to shareholders may be in cash (usually by bank transfer) or, if the corporation has a dividend reinvestment plan, the amount can be paid by the issue of further shares or by share repurchase. In some cases, the distribution may be of assets.