When using the direct method for reporting operating activities, which of the following would represent a cash-paid item?
A) Depreciation expense, adjusted for changes in depreciation methods
B) Patent amortization expense, adjusted for changes in estimates
C) Interest expense, adjusted for changes in interest payable and amortization of bond premiums or discounts
D) Loss on sale of plant assets
E) Gain on sale of plant assets

Question

Quizplus · Accepted Answer

Interest expense, adjusted for changes in interest payable and amortization of bond premiums or discounts, represents a cash-paid item when using the direct method for reporting operating activities. This is because it reflects actual cash flows related to interest payments, after considering the effects of any changes in related payable accounts and the amortization of bond premiums or discounts.

When Using the Direct Method for Reporting Operating Activities, Which