At 1 November 2018, Venusia Limited had a liability for interest payable of £1,800. The statement of profit or loss for the year to 31 October 2019 presents a figure of £22,200 for interest payable (finance expense). At 31 October 2019, Venusia Limited had accrued interest payable of £2,000 owed by the company. Based on these figures, what cash paid will be disclosed by Venusia Limited in respect of interest payable in its statement of cash flows for the financial year ended 31 October 2019?

Question

Quizplus · Accepted Answer

The cash paid for interest can be calculated by adjusting the interest expense (finance expense) for the year by the change in the accrued interest payable. The calculation is as follows: Interest expense for the year (£22,200) + Beginning accrued interest (£1,800) - Ending accrued interest (£2,000) = £22,000. This represents the actual cash outflow for interest payments during the year.

At 1 November 2018, Venusia Limited Had a Liability for Interest