Question

multiple choice question

long-term notes payable was $20 million at the beginning of the year and $30 million at the end. during the year an additional $15 million was borrowed. repayments on the statement of cash flow during the year were ______.

• $(5) million under investing activities
• $(5) million under financing activities
• $25 million under investing activities
• $(35) million under financing activities
• $(35) million under investing activities
• $25 million under financing activities

Explanation:

Set up the notes payable roll-forward equation

Using the Statement of Cash Flows knowledge point

$$ \text{Ending Balance} = \text{Beginning Balance} + \text{New Borrowings} - \text{Repayments} $$

Calculate the repayment amount

Using the Statement of Cash Flows knowledge point

$$
LATEXBLOCK0
$$

Determine cash flow classification and presentation

Using the Financing Activities knowledge point

$$
LATEXBLOCK1
$$

Answer:

• \$(5) million under investing activities
• \$(5) million under financing activities (Correct answer)
• \$25 million under investing activities
• \$(35) million under financing activities
• \$(35) million under investing activities
• \$25 million under financing activities