Question

Holly, Jolly is preparing a Cash Flow statement and wants to know how to report the...

Holly, Jolly is preparing a Cash Flow statement and wants to know how to report the cash received on a Note Receivable in the Statement?

Multiple Choice

  • Cash inflow from financing activities

  • Schedule of noncash investing and financing activities

  • Cash inflow from investing activities

  • Cash inflow from operating activities

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Homework Answers

Answer #1

Ans is

  • Cash inflow from operating activities

Reason:-

Note receivable is operating activity if they are the result of sales to customers. And we have assumed this here.

But in rare circumstances, if the note were issued for another purpose then it comes under-investing activity.

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