In 2015 Gee Co repaid $45,000 to the bank on a mortgage loan. $35,000 was interest on the mortgage and $10,000 was repayment of the principal. The repayment would appear in the cash flow statement as:

Question

Quizplus · Accepted Answer

The $35,000 interest paid on the mortgage is classified as an operating expense and will be included in the operating activities section of the cash flow statement as an outflow. The $10,000 repayment of the principal on the mortgage is classified as a financing activity and will be included in the financing activities section of the cash flow statement as an outflow. Therefore, the correct choice is D, where both outflows are accounted for in their respective sections.

In 2015 Gee Co Repaid $45,000 to the Bank on a Mortgage