FAR Cash Flows · Updated November 2026
Interest Paid, Interest Received, Dividends Received, Dividends Paid: Operating or Financing?
Under U.S. GAAP, three of the four common interest-and-dividend cash flows are classified differently than many candidates expect.
Interest paid
Cash interest paid is generally classified as an operating cash outflow under U.S. GAAP.
Interest received
Cash interest received is generally an operating cash inflow.
Dividends received
Cash dividends received are generally operating inflows.
Dividends paid
Cash dividends paid to owners are generally financing outflows because they represent distributions to capital providers.
The takeaway
For U.S. GAAP, interest paid, interest received, and dividends received are generally operating, while dividends paid are financing.
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FAQ
Are dividends paid operating under U.S. GAAP?
Generally no. They are financing.
Is interest received operating under U.S. GAAP?
Generally yes.
Should candidates distinguish U.S. GAAP from IFRS classification options?
Yes.