CFA Level I · CFA Level I Exam · Analyzing Statements of Cash Flows I
Under IFRS, a company using the indirect method would most likely classify interest paid as:
Under IFRS, interest paid may be classified as either an operating or a financing cash outflow, depending on the entity's policy, applied consistently. It is not an investing item, and the restriction to operating classification applies under US GAAP.
- Aan operating or financing cash outflow, by policy choiceCorrect
- Bonly an investing cash outflow
- Conly an operating cash outflow
Explanation
IFRS allows interest paid to be classified as operating or financing, applied consistently. It is never investing. US GAAP requires operating.
Did you get it right without looking?
One question tells you little. A timed set on Analyzing Statements of Cash Flows I shows your real accuracy, how long you take and where you lose marks.
More Analyzing Statements of Cash Flows I questions
- Which of the following cash flows is most likely classified as a financing activity under IFRS?
- A company sells equipment with a carrying amount of 40,000 for 52,000 cash. The gain is included in net income. Under the indirect method, t…
- A company reports sales of 900, and accounts receivable rose from 120 to 150 during the year. Using the direct method, cash collected from c…
- Tavin Corp's cost of goods sold was 540,000. Inventory increased by 25,000 and accounts payable increased by 15,000. Cash paid to suppliers …
- In a reconciliation of net income to operating cash flow under the indirect method, which adjustment is most likely to be a subtraction from…
- Marlow Ltd reported sales of 900,000. Accounts receivable rose from 120,000 to 150,000 during the year. Cash collected from customers is clo…