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.
------------------------------
Mengrong Lin
Accountant
New Taipei City
Taiwan
------------------------------
Original Message:
Sent: 05-27-2020 10:12 PM
From: Cole Ledford
Subject: Part 1: Statement of Cash Flow Help
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!
------------------------------
Cole Ledford
Accountant
Gray, TN
United States
------------------------------