Financing activities include which of the following?

Financing activities include which of the following?

• A. They include repayments of loans and dividends paid but exclude issue of shares
• B. They include proceeds from the issue of shares, repayments of loans, and dividends paid
• C. They include cash receipts from customers
• D. They include purchases of non-current assets

Answer: (B)

Financing activities cover cash flows that affect how a company finances its operations and returns capital to owners. They include obtaining funds by issuing shares and borrowing, repaying borrowings, and paying dividends to shareholders. Therefore, the cash flows from financing should include proceeds from issuing shares, repayments of loans, and dividends paid. Cash receipts from customers are operating activities, and purchases of non-current assets are investing activities, so those do not belong in financing. This makes the option that combines issuing shares, loan repayments, and dividends paid the correct one.

Financing activities cover cash flows that affect how a company finances its operations and returns capital to owners. They include obtaining funds by issuing shares and borrowing, repaying borrowings, and paying dividends to shareholders. Therefore, the cash flows from financing should include proceeds from issuing shares, repayments of loans, and dividends paid. Cash receipts from customers are operating activities, and purchases of non-current assets are investing activities, so those do not belong in financing. This makes the option that combines issuing shares, loan repayments, and dividends paid the correct one.