Which of the following are cash from financing activities of?
A. Cash receipt from issue of share
B. Cash payment for buy-back of share
C. Brokerage paid for acquisition of fixed assets
D. Payment of cash dividend
E. Cash receipt of interest and dividend on Long-term investment
Choose the correct answer from the options given below:

Correct option is D

Cash flow from financing activities refers to cash transactions related to an entity's financing, including raising capital, repaying debt, and distributing dividends. These activities primarily affect the company’s equity and long-term liabilities.

The following are financing activities:

1. Cash receipt from the issue of shares (A - Included)

   • When a company issues shares, it receives cash from investors.

   • This inflow of cash is a financing activity because it increases the company's equity capital.

2. Cash payment for buy-back of shares (B - Included)

   • When a company buys back its own shares, it reduces equity and pays cash to shareholders.

   • Since it directly affects financing, it is considered a cash outflow under financing activities.

3. Payment of cash dividend (D - Included)

   • Dividends paid to shareholders are a return on their investment.

   • Since dividend payments reduce retained earnings and involve cash outflow, they fall under financing activities.

On the other hand, some activities are not considered financing activities:

1. Brokerage paid for the acquisition of fixed assets (C - Not Included)

   • The acquisition of fixed assets falls under investing activities, not financing.

   • Brokerage expenses are considered part of the capital expenditure and classified under investing activities.

2. Cash receipt of interest and dividend on long-term investment (E - Not Included)

   • Cash receipts from interest and dividends are part of the company's operating or investing activities, not financing.

   • These receipts are classified as cash inflows from investing activities because they arise from financial investments.

Information Booster:

1. Financing activities include transactions related to a company’s funding sources, such as equity issuance, debt issuance, dividend payments, and share repurchases.

2. Cash inflows from financing activities include:

   • Proceeds from issuing shares or other equity instruments.

   • Loans or borrowings received from financial institutions.

3. Cash outflows from financing activities include:

   • Debt Repayment to banks or bondholders.

   • Share buyback programs where companies repurchase their shares.

   • Dividend payments as returns to shareholders.

4. The financing section of the cash flow statement helps investors understand how a company funds its operations and expansions.

Additional Knowledge:

1. Brokerage paid for acquisition of fixed assets (C - Incorrect)

   • When a company buys fixed assets, any brokerage or transaction fee incurred is an investing activity rather than a financing activity.

   • This is because the expenditure relates to acquiring long-term assets rather than raising or distributing capital.

2. Cash receipt of interest and dividend on long-term investment (E - Incorrect)

   • Interest and dividend income received from investments falls under operating or investing activities, not financing.

   • If the company actively invests in securities, such cash inflows are considered investing activities.

   • Financing activities focus on how a company raises and returns capital, rather than income from financial investments.​