Dividends paid belong in the operating activities section of the statement of cash flows.Group startsTrue or FalseTrue, unselectedFalse, unselected

Title: Understanding Cash Flows Classification

1. Break Down the Problem

   • Assess the classification of dividends paid in a statement of cash flows.
   • Determine whether they fall under operating activities or other categories.

2. Relevant Concepts

   • Operating Activities: Activities that affect net income and involve cash inflows and outflows from the core business operations.
   • Financing Activities: Activities related to obtaining or repaying capital, including dividends paid and received.

3. Analysis and Detail

   • Dividends paid are distributions of earnings to shareholders. They represent a return on investment for equity holders.
   • According to generally accepted accounting principles (GAAP), dividends paid are classified as cash outflows in the financing section of the cash flow statement, not operating activities.

4. Verify and Summarize

   • Given that dividends are returns to shareholders, they do not pertain to operating income. Their classification as financing activities is consistent with accounting standards.

Final Answer

False. Dividends paid belong in the financing activities section of the statement of cash flows, not the operating activities section.