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in preparing the cash flows from operating activities section of the statement of cash flows by...

in preparing the cash flows from operating activities section of the statement of cash flows by the indirect method the amortization of bond discount for the period is deducted from the net income for the period

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Answer #1

Above statement is False

Net income in cash flow statement includes all the esimates and non cash items due to accrual methosd of accounting. Cash flow statement shows the true inflow and outflow in cash, to do so several non cash items and cash items are considered for the same.

The amortization of the bond discount is non cash activity, though it increase interest expense but it does not leed to outflow of cash. Hence, we need to ADD this to net income of cash flow statement

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