noseykibitzer
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- Jun 18, 2026
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Periodically I go back to the CFA sample stuff because it makes me feel like I know something
Question 74
States - which of the following best describe how issuing a zero-coupon bond affects a company's financial statement?
a) net income is overstated every year until maturity
b) cash flow from operations decreases for the life of the bond
c) cash flow from investing decreases during the year of maturity
d) cash flow from financing increases during the year of issuance
d is the pretty obvious answer...but I was also looking at b. because technically interest expense is recognized on the P&L and does increase for the life of the bond and would decrease NI so this would cause a subsequently decrease CFO, and there is no actual cash outflow from the accrual of interest year over year. You would think based upon everything else that CFO would be overstated but really would it be everything else held constant and equal? Any help is appreciated?
Question 74
States - which of the following best describe how issuing a zero-coupon bond affects a company's financial statement?
a) net income is overstated every year until maturity
b) cash flow from operations decreases for the life of the bond
c) cash flow from investing decreases during the year of maturity
d) cash flow from financing increases during the year of issuance
d is the pretty obvious answer...but I was also looking at b. because technically interest expense is recognized on the P&L and does increase for the life of the bond and would decrease NI so this would cause a subsequently decrease CFO, and there is no actual cash outflow from the accrual of interest year over year. You would think based upon everything else that CFO would be overstated but really would it be everything else held constant and equal? Any help is appreciated?