Is it logical that interest paid is classified as a cash outflow in the Operating Activities section

Question:

Is it logical that interest paid is classified as a cash outflow in the Operating Activities section of the statement of cash flows but that dividends paid are included in the Financing Activities section? Explain your answer.

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For book-img-for-question

Using Financial Accounting Information The Alternative to Debits and Credits

ISBN: 978-1133161646

7th Edition

Authors: Gary A. Porter, Curtis L. Norton

See More Books

Question Posted: Jan 12, 2012 03:04 AM

See More Questions

The operating activities section of the statement of cash flows for PepsiCo, Inc., owner of the Pepsi beverage brand, is shown as follows: a. Why are impairment and restructuring charges added to the...
The operating activities section of the statement of cash flows for General Motors Corporation is provided below for three recent years. A large expense for General Motors is its pension expense....
Preparing the Operating Activities Section of the Statement of Cash Flows Anakin, Inc., provides the following account balances for 2015 and 2014: Dec. 31, 2015 Dec. 31, 2014 $ 18,700 $15,500 27,200...
Jin, the recruitment manager at Randents Inc., reviews the performance of his team members on a monthly basis. Based on the results of his monthly reviews, he decides to conduct daily reviews to...
Orange Corporation acquired new office furniture on August 15, 2016, for $130,000. Orange does not elect immediate expensing under 179. Orange claims any available additional first-year...
Explain what it means for an instruction set to be orthogonal.
Could an extend use case have a primary actor? Explain.
Hi-sense Technologies produces stripped-down phones for sale to customers in frontier economies. The firm purchases used or obsolete models of specific smartphone models. It removes nonstandard...
Ryan has been appointed by Target Internationals, a hardware manufacturing firm, as a marketing researcher and has been asked to conduct marketing research to produce new insights of consumer...
Allstar Company invests in a project with expected cash inflows of $9,000 per year for four years. All cash flows occur at year-end. The required return on investment is 9%. If the project generates...
Why do accounting standards require a company to separately disclose income taxes paid and interest paid if it uses the indirect method?
Jackson Company prepays the rent on various office facilities. The beginning balance in Prepaid Rent was $9,600, and the ending balance was $7,300. The income statement reports Rent Expense of...
How does the measurement of the fair value of a liability differ from that of an asset?
What problems arise in reference to contribution when the plaintiff releases a defendant?
What changes did the Progressive Era reformers bring to the tort system, and why?
Joint and several liability a. is frequently relied upon by plaintiffs. b. was originally introduced when the doctrine of contributory negligence prevailed. c. seems to reduce insurance costs. d. all...
True Or False Tort systems can expose corruption and other misconduct.
True Or False Defendants are discouraged from settling when nonreleased defendants cannot seek contribution from released defendants.
Applied Nanotech is thinking about introducing a new surface cleaning machine. The marketing department has come up with the estimate that Applied Nanotech can sell 10 units per year at 0.3 million...
Modify the CYK algorithm so that it applies to any CFG, not just those in CNF.
Does this pose a problem for external users seeking to assess the businesss financial health?
The equipment was expected to have a useful life of three years, or 25,000 operating hours, and a residual value of $4,500. The equipment was used for 12,000 hours during 2008, 9,000 hours in 2009,...
New lithographic equipment, acquired at a cost of $131,250 at the beginning of a fiscal year, has an estimated useful life of five years and an estimated residual value of $11,250. The manager...
Dain Company acquires the land and building owned by Corrs Company. What types of costs may be incurred to make the asset ready for its intended use if Dain Company wants to use (a) Only the land,...
10. The probability that automobile sales will increase next month (A) is estimated to be 0.40. The probability that the sale of replacement parts will increase (R) is estimated to be 0.50. The...
You are trying to prepare financial statements for Bartlett Pickle Company, but seem to be missing its balance sheet. You have Bartlett's income statement, which shows sales last year were $630...
Custom Cabinetry has one job in process (Job 120) as of June 30; at that time, its job cost sheet reports direct materials of $6,400, direct labor of $3,400, and applied overhead of $2,890. Custom...

Is it logical that interest paid is classified as a cash outflow in the Operating Activities section

Question:

Step by Step Answer:

An argument can be made that it is inconsistent to report interest paid i...View the full answer

Using Financial Accounting Information The Alternative to Debits and Credits

Students also viewed these Managerial Accounting questions