You Are the Controller for McBride & Associates

Essay

You are the Controller for McBride & Associates. Your accounting intern from the local university has been assigned the task of preparing your company's statement of cash flows. The intern has come to you with a question. She is not sure how to report some dividends the company had received during the year. She explains that on first thought, it seems like dividends represent a financing activity since they are related to shares of stock that companies issue to finance their businesses. But she is having second thoughts. Explain to your intern how dividends (both received and paid) should be classified on the cash flow statement.