On January 1, 2016, the long-term liability section of Quick Silver Co.balance sheet showed a balance of $800,000 in the bonds payable account.On December 31, 2016, the balance in that same account was $765,000.This change would appear on the statement of cash flows as
A) an outflow of cash of $35,000 in the financing activities category.
B) an inflow of cash of $35,000 in the financing activities category.
C) an outflow of cash of $35,000 in the investing activities category.
D) an inflow of cash of $35,000 in the investing activities category.

Question

Quizplus · Accepted Answer

The decrease in bonds payable from $800,000 to $765,000 indicates that the company paid off $35,000 of its bonds, which is an outflow of cash in the financing activities category.

On January 1, 2016, the Long-Term Liability Section of Quick