Interest payments to creditors are reported in a

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43. Interest payments to creditors are reported in a statement of cash flows as: A. An investing activity. B. A borrowing activity. C. A financing activity. D. An operating activity. AACSB: Reflective Thinking AICPA FN: Measurement Blooms: Understand Difficulty: 1 Easy Learning Objective: 21-03 Determine cash flows from operating activities by the direct method. Spiceland - Chapter 21 #43 Topic: Cash flows from operating activities-direct method
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44. Which of the following does not represent a cash flow relating to operating activities? Dividends paid to stockholders are considered cash flows relating to financing activities. However, U.S. GAAP requires interest paid to bondholders to be considered an operating activity. AACSB: Reflective Thinking AICPA FN: Measurement Blooms: Understand Difficulty: 2 Medium Learning Objective: 21-03 Determine cash flows from operating activities by the direct method. Spiceland - Chapter 21 #44 Topic: Cash flows from operating activities-direct method
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45. Which of the following is not true regarding the statement of cash flows? "working backwards" to convert that amount to a cash basis. increase or decrease from operating activities. statements either do not provide or provide only indirectly. The indirect method derives cash flows indirectly by starting with net income and "working backwards" to convert that amount to a cash basis. AACSB: Analytic AICPA FN: Measurement Blooms: Analyze Difficulty: 2 Medium Learning Objective: 21-04 Determine cash flows from operating activities by the indirect method. Spiceland - Chapter 21 #45 Topic: Cash flows from operating activities-indirect method
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46. On June 4, White Corporation issued $400 million of bonds for $386 million. During the same year, $1 million of the bond discount was amortized. In a statement of cash flows prepared by the indirect method, White Corporation should report: It is a financing activity of $386 million and an addition to net income of $1 million. AACSB: Analytic AICPA FN: Measurement Blooms: Analyze Difficulty: 3 Hard Learning Objective: 21-04 Determine cash flows from operating activities by the indirect method. Spiceland - Chapter 21 #46 Topic: Cash flows from operating activities-indirect method
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