Red Manufacturing Company owns 40% of the outstanding common stock of Blue Supply Company. During 2013, Red received a $50 million cash dividend from Blue. What effect did this dividend have on Red's 2013 statement of cash flows?
A)Cash from operating activities increased.
B)Cash from investing activities increased.
C)Cash from financing activities increased.
D)No effect.

Question

Quizplus · Accepted Answer

The dividend received by Red Manufacturing Company from Blue Supply Company is considered cash inflow from operating activities, as it is a return on investment.

Red Manufacturing Company Owns 40% of the Outstanding Common Stock