Cash paid for preferred stock dividends should be shown on the statement of cash flows under
A) investing activities
B) financing activities
C) noncash investing and financing activities
D) operating activities

Question

Quizplus · Accepted Answer

Cash paid for preferred stock dividends is considered a financing activity because it involves payments made to investors who have provided financing to the company in the form of preferred stock. It is not an operating activity because it does not directly relate to the day-to-day operations of the business, nor is it a noncash investing and financing activity because it involves actual cash payments.

Cash Paid for Preferred Stock Dividends Should Be Shown on the Statement