In preparing a statement of cash flows, the issue of debt should be reported separately from the retirement of debt.

Question

Quizplus · Accepted Answer

Debt and retirement of debt are two separate transactions and should be reported separately in the statement of cash flows to provide a more detailed picture of the company's financing activities. The cash inflows from borrowing should be reported under financing activities, while the cash outflows from retiring debt should be reported under financing activities as well.

In Preparing a Statement of Cash Flows, the Issue of Debt