Final answer:
Interest is normally presented as a non-operating item on the income statement and categorized under operating activities in the statement of cash flows, reflecting its nature as part of financial management separate from core operations.
Step-by-step explanation:
Interest is normally shown as a non-operating item on the income statement and a operating activity on the statement of cash flows.
In the context of international finance, when a country receives investment income, this is documented in the current account balance.
The current account records transactions related to exports and imports of goods and services, as well as investment income and current transfers.
For instance, in an income statement, the interest received from investments or paid on debts would be separated from the core business operations.
On the statement of cash flows, the cash received from interest is considered part of the operating activities, as it is a source of cash from typical business operations.
When considering country-level economics, the flow of investment funds and the income generated from those investments can be seen moving across borders, reflecting the interconnectedness of global trade and finance.