If bonds are issued at a discount at the beginning of the year,how will information related to the bonds be reported on the statement of cash flows in the year of issuance?
A)the bond proceeds will increase and the interest paid will decrease cash from financing activities
B)the bond proceeds will increase cash from financing activities and the interest paid will decrease cash from operating activities
C)the bond proceeds will increase cash from financing activities and the interest expense will decrease cash from operating activities
D)the bond proceeds will increase cash from financing activities,the interest paid will decrease cash from operating activities,and discount amortization will decrease cash from investing activities

Question

Quizplus · Accepted Answer

The bond proceeds increase cash from financing activities because this is where cash inflows from issuing debt are reported. The interest paid decreases cash from operating activities because interest payments are considered part of the company's operational cash outflows.

If Bonds Are Issued at a Discount at the Beginning