U.S.GAAP requires the classification of
A)the cash outflow for interest expense as an operating activity and the dividends that a firm pays to its shareholders as a financing activity.
B)the cash outflow for interest expense and the dividends that a firm pays to its shareholders as a financing activity.
C)the cash outflow for interest expense and the dividends that a firm pays to its shareholders as an investing activity.
D)the cash outflow for interest expense and the dividends that a firm pays to its shareholders as an operating activity.
E)the cash inflow for interest expense and the dividends that a firm pays to its shareholders as an operating activity.

Question

Quizplus · Accepted Answer

According to U.S.GAAP, the cash outflow for interest expense is classified as an operating activity, while dividends paid to shareholders are classified as financing activities. This is in accordance with the guidance provided in the Statement of Cash Flows standard (ASC 230), which requires cash flows to be classified into three categories: operating, investing, and financing activities.

U.S.GAAP Requires the Classification of