Question

All of the following statements related to preparation of the statement of cash flows are true except
A. Purchase of an intangible asset is classified as an investing activity.
B. Repaying the principal of notes payable is classified as a financing activity.
C. Cash dividends paid to shareholders are classified as a financing activity
D. A company may report cash flows from operating activities using either the direct or indirect method.
E. Interest expense may be reported under operating or financing based on which one results in better cash flows.

Answer 1

Answer:

E. Interest expense may be reported under operating or financing based on which one results in better cash flows.

Explanation:

Interest expense is only reported under that cash flow from operating activities. No choice is available to report this under financing activity.