A Company Had an Increase in Interest Payable During the Year

question 56

Multiple Choice

A company had an increase in interest payable during the year and also amortized discount on bonds payable.Under the direct method, the amount of interest paid during the year to be reflected in the statement of cash flows is

• A)interest expense plus the increase in interest payable minus the discount amortization
• B)interest expense plus the increase in interest payable plus the discount amortization
• C)interest expense minus the increase in interest payable minus the discount amortization
• D)interest expense minus the increase in interest payable plus the discount amortization

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Definitions:

Savings and Loan Debacle

A financial crisis in the 1980s and 1990s involving the collapse of savings and loan associations due to risky business practices and regulatory failures.

Risky Real Estate Loans

Loans given for real estate purchases that carry a higher risk of default, often due to the borrower's credit status or the nature of the property.

Taxpayers

Individuals or entities that are required to pay taxes to a government body, typically based on income, property value, or consumption.

Commercial Banks

Financial institutions that offer a wide range of services such as accepting deposits, providing loans, and other banking services to the public.