The issuance of notes payable for borrowing is classified in the statement of cash flows as a(n):
A)Operating activity.
B)Investing activity.
C)Financing activity.
D)Noncash activity.

Question

Quizplus · Accepted Answer

Notes payable for borrowing represents a financing activity, as it is a liability that is incurred to raise funds for the company's operations or investments. The statement of cash flows separates transactions based on their nature of the activities, and this particular transaction is classified under financing activities.

The Issuance of Notes Payable for Borrowing Is Classified in the Statement