Answer
(a) Payment of cash to lenders for interest.
Work Step by Step
Operating activities include cash flows related to the company’s core business operations, such as:
- Cash received from customers
- Cash paid for goods and services
- Cash paid for salaries, rent, and interest
Financing activities include:
- Receipt of cash from issuing stock (b)
- Payment of dividends (c)
So, payment of interest is classified as an operating cash outflow under U.S. GAAP.
Therefore, the correct answer is (a) Payment of cash to renders for interest.
