CMA Study Group

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  • 1.  Part 1: Statement of Cash Flow Help

    Posted 05-27-2020 10:12 PM
    Hey everyone! I had a question regarding the statement of cash flows. In the Gleim Review book example 1-12, I do not understand why the interest expense that was included in the net income was not included in operating activities. I thought interest payments on loans were outflows in the operating activities? Could someone please shed some light onto this? I do not understand what I am missing. Thank you so much!

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    Cole Ledford
    Accountant
    Gray, TN
    United States
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  • 2.  RE: Part 1: Statement of Cash Flow Help

    Posted 05-27-2020 10:45 PM
    The interest expense is actual payment in year 2.
    On December 31, Year 2, the $31,500 due on a loan (principal + accumulated interest) was repaid.

    If the interest is an accrued(payable) amount will be added back in the operating activities.

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    Mengrong Lin
    Accountant
    New Taipei City
    Taiwan
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