When a Company Purchases and Retires Its Bonds,which of the Following

question 47

Multiple Choice

When a company purchases and retires its bonds,which of the following is the correct reporting on the statement of cash flows?

• A)Gain or loss in operating section,amount of cash paid in investing section
• B)Gain or loss in financing section,amount of cash received in operating section
• C)Gain or loss in operating section,amount of cash paid in financing section
• D)Gain or loss in investing section,amount of cash received in operating section

---

Definitions:

Free Cash Flow

The cash a company generates after accounting for cash outflows to support operations and maintain its capital assets, available for paying dividends or debt.

Solvency

The ability of a company to meet its long-term financial commitments and continue operations in the long-term, often assessed through ratios comparing assets to liabilities.

Profitability

measures how much profit or financial gain is generated as a percentage of the revenue of a company or business segment.

Liquidity

The simplicity of transforming an asset into cash without influencing its market value.