Skip to content

CA Intermediate · Advanced Accounting · AS 3 Cash Flow Statement

Tulsi Retail Ltd. is a non-financial company. Which treatment of the following items is correct under AS 3?

For a non-financial company, interest paid and dividends paid are classified as financing activities. Interest and dividends received are investing inflows, and income tax paid is normally operating unless specifically linked to investing or financing. The other options misclassify these items.

  1. AInterest paid and dividend paid are both classified under financing activitiesCorrect
  2. BInterest received is always operating, and dividend paid is operating
  3. CInterest paid is investing and dividend received is financing
  4. DIncome tax paid is always classified under financing activities

Explanation

For a non-financial enterprise, interest paid and dividend paid are financing outflows, while interest and dividends received are investing inflows. Income taxes are generally operating unless specifically identifiable with financing or investing. Other options reverse these classifications.

Did you get it right without looking?

One question tells you little. A timed set on AS 3 Cash Flow Statement shows your real accuracy, how long you take and where you lose marks.

Practise AS 3 Cash Flow StatementFree diagnostic mock

More AS 3 Cash Flow Statement questions