In a Statement of Cash Flows, Interest Payments to Lenders

question 15

Multiple Choice

In a statement of cash flows, interest payments to lenders and other creditors should be classified as cash outflows for

• A) operating activities.
• B) borrowing activities.
• C) lending activities.
• D) financing activities.

---

Definitions:

Mortgagee

The lender in a mortgage agreement, typically a bank or financial institution, which has the right to repossession if the borrower defaults.

Court

A government institution with the authority to adjudicate legal disputes between parties and administer justice in civil, criminal, and administrative matters.

Principal

The person who authorizes an agent to represent him or her.

Life Estate

A legal right to use and derive benefits from a property for the duration of one's life, after which the property passes to another designated person.