Under US GAAP, which of the following about cash flow statment impact is most accurate A: coupon payment will decrease operating cash flow and discount when paid will decrease financing cash flow B:periodic interest expense will decrease operating cash flow and discount when paid will decrease financing cash flow C:coupon payment and discount when paid will decrease financing cash flow Taken from Book II of schweser; pg 26: Q63
A
good quesiton, tricky with working so similar in A & B i’ll go with B
A - periodic interest expense isn’t cash flow, it’s an accounting number.
answer is A. Note interest expense (residue) for bonds is amortized and paid at once at maturity
yea A is correct
B , because coupon payment and interest expense (is on income statement) are different things .