If a Company Extinguishes Debt,which of the Following Explains the Effect

question 10

Multiple Choice

If a company extinguishes debt,which of the following explains the effect of this transaction on a statement of cash flows?

• A)If the debt is extinguished with a loss,the loss is subtracted from the operating section if the company uses the direct method.
• B)If the debt is extinguished with a loss,the loss will not appear in the operating or the investing section if the company uses the direct method.
• C)If the debt is extinguished with a gain,the gain is added to the cash flow from financing section if the company uses the indirect method.
• D)If the debt is extinguished with a gain,the gain is added to the operating section if the company uses the indirect method.
• E)If the debt is extinguished with a loss,the loss is added to the financing section if the company uses the indirect method.

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Definitions:

Sociocultural Theories

Psychological theories that emphasize the importance of societal and cultural factors in the development of mental processes and behavior.

Cohort Effects

Phenomena observed in research where the characteristics of a particular group of individuals, defined by a shared temporal experience or common life event, influence the outcome of a study.

Ethnic/Racial Background

The categorization of individuals based on shared ancestry, cultural identity, or social affiliation with a particular race or ethnicity.

Biological Theories

Theories of abnormality that focus on biological causes of abnormal behaviors.