FA – MAY 2015 – L1 – SA – Q1 – Scope and Purpose of Accounting

Identify the transaction that is not a financing activity in the statement of cash flows.

Question

Which of the following will NOT be included as financing activities in the statement of cash flows of a business entity?
A. Proceeds from the issue of shares
B. Cash dividend paid to shareholders
C. Loan from the bank
D. Proceeds from disposal of non-current assets
E. Proceeds from the issue of debentures

Answer

Answer: D
Explanation:
The disposal of non-current assets is classified as an investing activity, not a financing activity. Financing activities are those that involve changes in the equity or borrowings of a business, such as issuing shares, debentures, or obtaining loans.

Tags: Business Entity, Cash Flows, Financing Activities
Level: Level 1

Topic: Scope and Purpose of Accounting
Series: MAY 2015

Uploader: Kwame Aikins