In preparing a statement of cash flows, the issuance of debt should be reported separately from the retirement of debt.

Question

Quizplus · Accepted Answer

The issuance of debt and retirement of debt are separate events that should be reported separately on the statement of cash flows. The issuance of debt will result in an inflow of cash, while the retirement of debt will result in an outflow of cash. Separating these events provides more relevant information to users of the financial statements.

In Preparing a Statement of Cash Flows, the Issuance of Debt