Madison Company issued an interest-bearing note payable with a face value of $24,000 and a stated interest rate of 8% to Metropolitan Bank on August 1, Year 1. The note carried a one-year term. Based on this information alone, what is the amount of cash flow from operating activities reported on Madison's Year 1 statement of cash flows?

Question

Quizplus · Accepted Answer

The payment of interest on the note does not affect cash flow from operations, as it is classified as a financing activity. Therefore, there is no cash flow from operating activities to report.

Madison Company Issued an Interest-Bearing Note Payable with a Face