The amortization of bond premium on long-term debt should be presented in a statement of cash flows (using the indirect method for operating activities) as a(n)
A) addition to net income.
B) deduction from net income.
C) investing activity.
D) financing activity.

Question

Quizplus · Accepted Answer

The amortization of bond premium on long-term debt is deducted from net income in the statement of cash flows using the indirect method for operating activities. This is because the premium is considered an adjustment to interest expense, which is added back to net income in the adjustments to reconcile net income to net cash provided by operating activities.

The Amortization of Bond Premium on Long-Term Debt Should Be