ACCA Applied Knowledge · Financial Accounting · Statement of cash flows (excluding partnerships)
Brindle Co had a finance cost accrual of $4,000 at 1 April and $6,500 at 31 March. The statement of profit or loss finance cost for the year is $38,000. What is the interest paid shown in the statement of cash flows?
Interest paid is $35,500. The $38,000 expense is increased by the opening accrual of $4,000 and reduced by the $6,500 still unpaid at year end, because the larger closing accrual means less cash left the business.
- A$35,500Correct
- B$40,500
- C$38,000
- D$32,000
Explanation
Interest paid = opening accrual 4,000 + charge 38,000 - closing accrual 6,500 = $35,500. The accrual increased by 2,500, so 2,500 of the expense was unpaid. The $40,500 option adds the increase instead of deducting it.
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