If a company made a principal repayment on a long-term loan, which of the following statements about the repayment is true?
A)It is reported in the cash from operations.
B)It is reported in the cash from financing activities.
C)It is reported in the cash from investing activities.
D)It is reported as an expense on the income statement.

Question

Quizplus · Accepted Answer

Principal repayment on a long-term loan is reported in the cash from financing activities section of the cash flow statement. This is because the long-term loan is classified as a financing activity on the balance sheet and the repayment of principal reduces the company's debt, which is categorized as a financing item.

If a Company Made a Principal Repayment on a Long-Term