Braden and Sons,Inc.borrowed $700,000 cash from Trenton Savings and Loan last year.In addition,the company repaid a $450,000 note payable to First National Bank.How should these transactions be listed in the Statement of Cash Flows?
A) Braden can combine the transactions and show an increase to cash of $250,000 in the investing activities section of the statement.
B) Braden can combine the transactions and show an increase to cash of $250,000 in the financing activities section of the statement.
C) A decrease to cash for $450,000 is listed in the investing activities section and an increase of $700,000 is in the financing activities section.
D) Transactions must be shown separately as a decrease to cash for $450,000 and an increase of $700,000 in the financing activities section.

Question

Quizplus · Accepted Answer

The borrowing and repayment of loans are both financing activities and should be shown separately in the financing activities section of the cash flow statement.