Final answer:
A credit entry of $400,000 for the payment of dividends in a cash account is classified as a financing activity, as it pertains to changes in equity capital through a distribution to shareholders. So the correct answer is option A.
Step-by-step explanation:
When a cash account shows a credit entry of $400,000 for the payment of dividends, this transaction would be classified as a financing activity. Financing activities include transactions that result in changes in the size and composition of the equity capital or borrowings of the entity. The payment of dividends represents a distribution of earnings to shareholders and is considered an essential part of the return on investment for shareholders.