If a company uses the effective interest rate method, the amount of the cash flo

Question

If a company uses the effective interest rate method, the amount of the cash flow from operating activities will be

If a company uses the effective interest rate method, the amount of the cash flow from operating activities will be

A) the same as it would have been if the company had used the straight-line method. B)more than it would have been if the company had used the straight-line method. C)less than it would have been if the company had used the straight-line method. D)The answer cannot be determined from the information provided.

Explanation / Answer

Option A is correct.

Actual cash outflow remain same irrespective of the methid used only the amount of amortization done on year to year basis changes.

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