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Why is interest paid on amounts borrowed from the bank considered to be operating activities on cash flows?
Wiki User
∙ 9y ago
It is operating activity because business borrow from bank to fulfill it's working capital requirements and working capital is used to run day to day operations of business that's why it is operating activity.
Wiki User
∙ 9y ago
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What is the payment for the use of borrowed money?
Payment made for the use of borrowed money is called interest. Interest expense is shown on an income statement as a non-operating expense.
What is Payment made for the use of borrowed money called?
Payment made for the use of borrowed money is called interest. Interest expense is shown on an income statement as a non-operating expense.
What is treatment of interest in cash flow statement?
interest is shown in cash flow from operating activities as cash outflow if interest is paid.
Where the interest expense in cash flow statement?
Interest expense can be shown in cash flow from operating activities as well as cash flow from financing activities as well.
Cash flows from interest received are reported in the statement of cash flows as part of?
Operating activities
What is the distinction between operating and non operation income?
Income which is generated by normal business basic operating activities is called net operating income while other income then operating income is called non operating income like interest income or dividend income etc.
How to report Collection of interest on statement of cash flows?
collection of interest is part of cash flow from operating activities and cash inflows or outflows from it is shown in this section.
A charge for borrowed money usually the percentage of the amount borrowed is called?
That is called "interest"
What is the predetermined amount the borrower must pay for the use of borrowed money?
Interest is a predetermined amount that a borrower must pay for the use of borrowed money. Interest is calculated as a percentage of the amount borrowed.
Formula for net operating assets?
Get the balance sheet and sererate any financing activities from the operating activities. Financing activities are anything that is interest-bearing like debt, equity investments etc and not part of the business' everyday operations. The reformatted balance sheet should look like this: Operating Activities: Current Assets - Current Liabilities = Net Current Assets + Non Current Assets - Non Current Liabilities = NET OPERATING ASSETS - Financing activities (Net Financial Obligations) = Equity Cash is not an operating asset so the basic equation is: Total Assets - Cash = Operating Assets Total Liabilities - LTD - Current LTD = Operating Liabilities NOA = Operating Assets - Operating Liabilities
What is the term used for all of the money borrowed by the government and the interest on the money that is borrowed?
public debt
What interest is calculated on both the amount borrowed and any previous interest?
Compound interest, but only if the previous interest is accumulated.
