The amortization of bond discount on long-term debt should be presented in a Statement of Cash Flows as a(n):
A) Inflow and outflow of cash.
B) Outflow of cash.
C) Deduction from net income in the adjustments to reconcile net income to cash from operating activities.
D) Addition to net income in the adjustments to reconcile net income to cash from operating activities.

Question

Quizplus · Accepted Answer

The amortization of bond discount increases the interest expense recorded on the income statement, which does not involve an actual cash outflow. Therefore, it is added back to net income in the operating activities section of the cash flow statement to reconcile net income to cash from operating activities.

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