Which of the following statements is correct?
A)An outflow of cash for interest payments is reported as a cash flow from financing activities.
B)The conversion of bonds to stock is reported as a cash flow from financing activities.
C)An outflow of cash when callable bonds are recalled by the issuer is reported as a cash flow from financing activities.
D)Amortization of discounts and premiums on bonds payable are reported as a cash flow from financing activities.

Question

Quizplus · Accepted Answer

The correct statement is C because when callable bonds are recalled by the issuer, it involves repaying the bondholders, which is a financing activity. This is because it relates to the ways in which a company finances its operations, either through debt (bonds) or equity (stock).

Which of the Following Statements Is Correct