Arrow Printers paid $2,000 interest on short-term notes payable,$10,000 interest on long-term bonds,and $6,000 in dividends on its common stock.Arrow would report cash outflows from activities,as follows:
A)Operating,$2,000;Financing $16,000.
B)Operating,$0;Financing $18,000.
C)Operating,$12,000;Financing $6,000.

Question

Quizplus · Accepted Answer

Interest payments are considered operating activities, so the $2,000 and $10,000 interest payments are operating cash outflows. Dividends are considered financing activities, so the $6,000 in dividends is a financing cash outflow.

Arrow Printers Paid $2,000 Interest on Short-Term Notes Payable,$10,000 Interest