Skip to content

CA Final · Financial Reporting · Ind AS 7 Statement of Cash Flows

Kaveri Textiles Ltd, a manufacturing company preparing Ind AS financial statements, paid Rs 6,00,000 as dividend to its equity shareholders during the year. Its accountant, who is familiar with IAS 7, suggests showing this payment under operating activities. Which presentation is correct under Ind AS 7?

Dividend paid must be shown under financing activities. Unlike IAS 7, which allows it to be treated as an operating item, Ind AS 7 permits no such option, so Kaveri Textiles cannot present the Rs 6,00,000 dividend payment within operating cash flows.

  1. AOperating activities, as Ind AS 7 gives a free choice for non-financial entities
  2. BFinancing activities only, because Ind AS 7 has no option to classify dividend paid elsewhereCorrect
  3. CInvesting activities, as it is a distribution of profits
  4. DEither operating or financing activities, if disclosed consistently each year

Explanation

IAS 7 permits dividend paid to be shown as an operating item, but Ind AS 7 requires it to be classified as part of financing activities only. The operating option is therefore not available, and consistency of disclosure does not create a choice.

Did you get it right without looking?

One question tells you little. A timed set on Ind AS 7 Statement of Cash Flows shows your real accuracy, how long you take and where you lose marks.

Practise Ind AS 7 Statement of Cash FlowsFree diagnostic mock

More Ind AS 7 Statement of Cash Flows questions