Question:

Which of the following statements is incorrect?

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Interest/dividends received = Investing inflow. Dividends paid = Financing outflow.
  • Payment of dividend and interest will result in cash outflow from financing activities.
  • Payment of employee benefit expenses will result in cash outflows from operating activities.
  • Receipt of interest and dividend will result in cash inflow from financing activities.
  • Operating activities are the principal revenue generating activities of the enterprise.
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The Correct Option is C

Solution and Explanation

According to AS-3: - Receipt of **interest/dividends** is treated as **investing activities**, **not financing**. - **(C)** is thus incorrect. - **(A)** is partially true for dividends (financing) but **interest paid** can be classified based on policy. - **(B)** and **(D)** are correct statements.
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