CFA CFA Level 1 CFA Level 1 Question of the Week – Financial Reporting and Analysis

CFA Level 1 Question of the Week – Financial Reporting and Analysis

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    • Matt_AnalystPrep
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      According to US GAAP, interests incurred on a capital lease are most likely classified under:

      • A. cash flow from operating activities.
      • B. cash flow from financing activities.
      • C. either cash flow from operating or financing activities.
    • Matt_AnalystPrep
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      The correct answer is A.

      An interest expense is classified as a cash outflow from operating activities under US GAAP.

      Note: IFRS allows the option to classify it either as a financing activity or an operating activity.

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