Under the direct method, which one of the following would represent cash paid?
A) gains on sales of plant assets
B) losses on sales of plant assets
C) depreciation expense, adjusted for changes in depreciation methods
D) interest expense, adjusted for changes in interest payable and amortization of bond premium or discount

Question

Quizplus · Accepted Answer

Under the direct method of preparing the cash flow statement, cash paid for interest is represented by the interest expense, adjusted for changes in interest payable and amortization of bond premium or discount. This adjustment is necessary to reflect the actual cash flow related to interest payments, which may differ from the reported interest expense due to timing differences and the amortization of bond premiums or discounts.

Under the Direct Method, Which One of the Following Would