Under U.S.GAAP, the statement of cash flows classifies cash expenditures for interest on debt as a(n) _____ activity and classifies cash expenditures for dividends to shareholders as a(n) _____ activity.
A)operating; operating
B)operating: investing
C)operating; financing
D)financing; operating
E)financing; financing

Question

Quizplus · Accepted Answer

Under U.S. GAAP, cash expenditures for interest on debt are classified as operating activities because they relate to the entity's primary revenue-producing activities. Cash expenditures for dividends to shareholders are classified as financing activities because they relate to the ways an entity finances its operations through issuing or repaying equity and debt.

Under USGAAP, the Statement of Cash Flows Classifies Cash Expenditures for for Interest