The payment of interest on a loan is considered a ________ on a statement of cash flows prepared using the direct method.
A) cash outflow for operating activities
B) cash outflow for investing activities
C) cash outflow for financing activities
D) non-cash activity

Question

Quizplus · Accepted Answer

The payment of interest on a loan is considered part of the operating activities of a business because it relates to the cost of borrowing funds to operate the business. Therefore, it is classified as a cash outflow for operating activities on the statement of cash flows prepared using the direct method.

The Payment of Interest on a Loan Is Considered a ________