Which of the following items is reported on the statement of cash flows under financing activities?

Which of the following items is reported on the statement of cash flows under financing activities?

a. Stock split.

b. Declaration of a stock dividend.

c. Payment of a stock dividend.

d. Payment of a cash dividend.

e. Declaration of a cash dividend.

Answer: d. Payment of a cash dividend.

The statement of cash flows reports the inflows and outflows of cash and cash equivalents during a specific period, classified into three sections: These include the use and sale of operating assets, purchasing of used operating assets, acquiring and selling of long-term assets and receipts of services from and provision of services to the company’s financiers. This kind of cash dividend options is classified under financing activities since it is a cash acquisition of the company’s share by the shareholders- a financing activity. This is a non- cash item hence it is not reported as part of the statement of cash flows and the cash dividend is instead stated separately. Base on the above discussion on stock splits, declaration and payment of stock dividends and declaration of cash dividends, it was agreed and understood that they are not cash transactions and therefore not recorded in the statement of cash flows. As for financing activities, only cash dividends are recorded because they fall under payments in connection with conger referring to cash.