Which of the Following Statements Is Incorrect

question 106

Multiple Choice

Which of the following statements is incorrect?

• A)It is common for companies to retire bonds and also issue new bonds in the same year as a way to replace higher interest rate debt with lower interest rate issuances.
• B)The cash payment of interest is reported as a cash flow from operating activities.
• C)Retiring bonds by paying cash creates a cash flow from investing activities when the issuing company buys the bonds back from investors.
• D)The cash payment to call an outstanding bond issue is reported as a cash flow from financing activities.

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Definitions:

Finance

The management of large amounts of money, especially by governments or large companies.

Double-Entry Accounting

An accounting method that records each transaction twice, once as a debit in one account and once as a credit in another, to ensure the books are always balanced.

Managerial Accounting

A type of accounting focused on providing financial information to managers within organizations to aid in decision-making and business strategy planning.

Cost Accounting

A method of accounting that focuses on calculating, recording, and analyzing all costs incurred by a business in producing goods or services.