An increase in the bonds payable account of $200,000 over the course of a year would be shown on the company's statement of cash flows prepared under the indirect method as:
A) an addition of $200,000 under investing activities.
B) a deduction of $200,000 under investing activities.
C) an addition of $200,000 under financing activities.
D) a deduction of $200,000 under financing activities.

Question

Quizplus · Accepted Answer

An increase in bonds payable represents additional borrowing, which is a financing activity. Therefore, it would be shown as an addition of $200,000 under financing activities on the statement of cash flows prepared under the indirect method.

An Increase in the Bonds Payable Account of $200,000 Over