The amortization of a bond premium can correctly be presented in the statement of cash flows in which of the following ways?
A) A positive adjustment to net income in determining cash flows from operating activities
B) A use of cash in determining cash flows from investing activities
C) A source of cash in determining cash flows from financing activities
D) A negative adjustment to net income in determining cash flows from operating activities

Question

Quizplus · Accepted Answer

Amortization of a bond premium is a non-cash expense that reduces net income but does not involve the use of cash. Therefore, it should be added back as a negative adjustment to net income in the operating activities section of the statement of cash flows.

The Amortization of a Bond Premium Can Correctly Be Presented