Which of the following is considered a financing activity?
A) interest earned on short-term investments
B) sale of inventory
C) dividends received on investments in shares
D) dividends paid to shareholders

Question

Quizplus · Accepted Answer

Dividends paid to shareholders are considered a financing activity as they involve paying out a portion of the company's earnings to its investors, which affects the company's share capital and shareholder equity.

A) Interest earned on short-term investments would be considered an operating activity as it relates to the company's core business operations. 
B) Sale of inventory is also an operating activity as it involves selling the company's products or goods. 
C) Dividends received on investments in shares are considered an investing activity as they involve receiving returns on the company's investments in other businesses.

Which of the Following Is Considered a Financing Activity