Question

. Please identify the correct activity in the statement of cash flows regarding the retirement of bonds payable at their maturity date?

a.
As an operating activity

b.
As an investing activity

c.
As a financing activity

d.
As a noncash investing and financing activity

Answer 1

The retirement of bonds payable at their maturity date is classified as a financing activity in the statement of cash flows, reflecting the company's repayment of a long-term liability.

Step-by-step explanation:

The retirement of bonds payable at their maturity date is recorded in the statement of cash flows as a financing activity. This is because the repayment of debt is related to the financing of the company's operations. Financing activities typically include transactions involving long-term liabilities and equity. When a company retires its bonds, it is essentially settling a long-term liability, which is a use of cash within the financing section of the cash flow statement.