Final answer:
Cash dividends declared affect the statement of cash flows by reducing the amount of cash available to the company. This distribution of cash is classified as a financing activity in the statement of cash flows.
Step-by-step explanation:
Cash dividends declared affect the statement of cash flows by reducing the amount of cash available to the company. When a company declares cash dividends, it is essentially distributing a portion of its profits to its shareholders. This distribution of cash is classified as a financing activity in the statement of cash flows.
For example, let's say a company declared a cash dividend of $10,000. In the statement of cash flows, this amount would be deducted from the company's cash from operating activities, as it represents a reduction in cash resources that could have been used for other purposes.