According to the statement of cash flows, an increase in interest expense will ________ the cash flow from ________ activities.
A) decrease; operating
B) decrease; financing
C) increase; operating
D) increase; financing
E) Increase; investment

Question

Quizplus · Accepted Answer

An increase in interest expense would be reported under the operating activities section in the statement of cash flows as it is classified as an operating expense. An increase in expense reduces the cash flow, therefore the cash flow from operating activities decreases.

According to the Statement of Cash Flows, an Increase in Interest