8 Required information 12.50 points Lecture Video Assessment 10-55 [LO 06] If a

Question

8 Required information 12.50 points Lecture Video Assessment 10-55 [LO 06] If a company uses the effective interest rate method, the amount of the cash flow from operating activitles will be the same as it would have been had the company used the straight-line method. O more than it would have been had the company used the straight-line method. less than it would have been had the company used the straight-line method. O None of the answers is correct References Multiple Choice Lecture Video Assessment 10-55 [LO 06

Explanation / Answer

When a company uses effective interest rate method then the amount of the cash flow from operating activities will be the same as it will be under straight line method.

As cash paid will be same under both method. Cash is paid on the face value of loan.

So correct answer is A.

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