The amortization of a premium on bonds payable:
A)has no effect on the cash payments for interest reported in the operating activities section of the statement of cash flows
B)increases the cash payments for interest reported in the operating activities section of the statement of cash flows
C)decreases the cash payments for interest reported in the operating activities section of the statement of cash flows
D)is reported in the financing activities section of the statement of cash flows

Question

Quizplus · Accepted Answer

The amortization of a premium on bonds payable is an accounting adjustment that spreads the premium paid over the life of the bond and does not affect the actual cash flow from interest payments. Therefore, it has no effect on the cash payments for interest reported in the operating activities section of the statement of cash flows.

The Amortization of a Premium on Bonds Payable