Which of the following statements is incorrect ?
It is common for companies to both retire debt and issue new bonds in the same year as a way to replace higher interest rate debt with lower interest rate issuances.
The cash payment of interest is reported as a cash flow from operating activities.
Retiring bonds by paying cash creates a cash flow from investing activities when the issuing corporation buys the bonds back from investors.
The cash payment to call an outstanding bond issue is reported as a cash flow from financing activities.
Solution
Statement \"The cash payment of interest is reported as a cash flow from operating activities.\" is incorrect, Becaue it will be shown from financing activities as interest payments in made on loans and other borrowings which is financing activities.
There fore second statement is incorrect.
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Which of the following statements is incorrect- It is common for compa.docx
1. Which of the following statements is incorrect ?
It is common for companies to both retire debt and issue new bonds in the same year as a way to
replace higher interest rate debt with lower interest rate issuances.
The cash payment of interest is reported as a cash flow from operating activities.
Retiring bonds by paying cash creates a cash flow from investing activities when the issuing
corporation buys the bonds back from investors.
The cash payment to call an outstanding bond issue is reported as a cash flow from financing
activities.
It is common for companies to both retire debt and issue new bonds in the same year as a way
to replace higher interest rate debt with lower interest rate issuances.
The cash payment of interest is reported as a cash flow from operating activities.
Retiring bonds by paying cash creates a cash flow from investing activities when the issuing
corporation buys the bonds back from investors.
The cash payment to call an outstanding bond issue is reported as a cash flow from financing
activities.
Solution
Statement "The cash payment of interest is reported as a cash flow from operating activities." is
incorrect, Becaue it will be shown from financing activities as interest payments in made on
loans and other borrowings which is financing activities.
There fore second statement is incorrect.
