Red Manufacturing Company owns 40% of the outstanding common stock of Blue Supply Company. During 2009, Red received a $50 million cash dividend from Blue. What effect did this dividend have on Red's 2009 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.Investment revenue is an operating activity.

Question

Quizplus · Accepted Answer

The dividend received by Red Manufacturing Company from Blue Supply Company is considered cash from operating activities, thus increasing cash from operating activities on Red's 2009 statement of cash flows.

Red Manufacturing Company Owns 40% of the Outstanding Common Stock