The retirement of callable bonds at an amount below face value would appear on a statement of cash flows as an:
A)outflow in the financing activities section.
B)inflow in the financing activities section.
C)outflow in the operating activities section.
D)inflow in the operating activities section.

Question

Quizplus · Accepted Answer

The retirement of callable bonds at an amount below face value would result in an outflow of cash as the company is paying off its debt at a discounted price. This transaction would be classified as a financing activity since it involves the repayment of long-term debt, and therefore would appear in the financing activities section of the statement of cash flows.

The Retirement of Callable Bonds at an Amount Below Face