If bonds are issued at a discount at the beginning of the year, how will informa

Question

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

Explanation / Answer

The bond proceeds will increase cash from financing activities and the interest paid will decrease cash from operating activities Option B is correct

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