A company has a net cash inflow from operating activities of $789,000, a net cash outflow of $50,000 from investing activities and a net cash inflow of $100,000 from financing activities. The company paid $124,000 in interest, $186,500 in income taxes, and $200,000 in dividends. Which of the following statements about the Statement of Cash Flows is NOT true:
A) Dividends of $200,000 will be reported as a cash outflow in the cash flow from investing activities section.
B) Supplemental disclosures required for a company using the indirect method include the amount of interest and the amount of income taxes paid.
C) The Statement of Cash Flows will show a net increase to cash and cash equivalents of $839,000.
D) If the direct method is used, the $124,000 of interest paid and the $186,500 of income taxes paid will be reported in the cash flows from operating activities.

Question

Quizplus · Accepted Answer

Dividends paid are reported as a cash outflow in the financing activities section, not the investing activities section.

A Company Has a Net Cash Inflow from Operating Activities