When the direct method is used to determine the cash flows from operating activities,which of the following adjustments must be made to interest expense to determine total interest payments?
A)Add all changes in Interest Payable.
B)Add decreases in Interest Payable and subtract increases in Interest Payable.
C)Add increases in Interest Payable and subtract decreases in Interest Payable.
D)Subtract all changes in Interest Payable.

Question

Quizplus · Accepted Answer

Interest Expense is directly converted to cash paid for interest by adding decreases in Interest Payable or subtracting increases in Interest Payable.

When the Direct Method Is Used to Determine the Cash