Is notes payable a financing activity?
Understand the Problem
The question is asking whether notes payable is classified as a financing activity, which suggests it relates to accounting and financial reporting concepts.
Answer
Yes
The final answer is yes, notes payable is a financing activity.
Answer for screen readers
The final answer is yes, notes payable is a financing activity.
More Information
Notes payable typically involve borrowing funds, which is classified under financing activities in the cash flow statement. This includes the cash flows from issuing notes and repaying the principal.
Tips
Do not confuse the payment of interest on notes payable, which is an operating activity, with the repayment of the principal, which is a financing activity.
Sources
- A Guide To Notes Payable on Cash Flow Statements | Indeed.com - indeed.com
- Statement of cash flows - loans? : r/CPA - Reddit - reddit.com
- Reporting Interest on a Note Payable on the Cash Flow Statement - accountingcoach.com
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